Phase-sensitive optical time domain reflectometer φ-OTDR is one of the most important means of distributed sensing and monitoring for intrusion and vibration due to its excellent overall performance. This paper explains the research progress of the source technology, the sensing technology and the signal demodulation technology of the distributed optical fiber sensing and monitoring system based on φ-OTDR, reviews the newest research results, and analyzes their innovativeness and existing problems. The principles of differential amplitude detection and direct phase demodulation are explained, and the difference between these two kinds of demodulated methods are compared. It is hard to demodulate the phase signal only from the speckle using differential amplitude detection, and this scheme is just an indirectly and qualitatively measuring method. Direct phase demodulation is a directly and quantitatively measure method, and can be use in dynamic measurement or fiber hydrophone, etc., but the influence of fading noise resulting from the inner pulse interference of Rayleigh scattering beams is obvious. Finally, the prospect of distributed optical fiber sensing and monitoring technology based on φ-OTDR is set forth.