Aiming at the noisy signals collected by distributed optical fiber sensing systems, a noise reduction method to modified ensemble local mean decomposition (MELMD) combined with independent component analysis (ICA) is proposed. The permutation entropy decision mechanism was introduced to improve the ability to suppress modal aliasing and spurious components. Firstly, the product function (PF) was obtained by decomposing the noisy signal by MELMD method, and the signal reconstruction was carried out. The difference between the noisy signal and the reconstructed signal was calculated to obtain the virtual noise, and the virtual channel was constructed. Then ICA was used to separate the signal-to-noise of the noisy signal and the virtual channel to obtain the final result. Experimental results show that the proposed method can better eliminate the noise in the signal, and retain the characteristic information of the signal.