We use phase optical time domain reflectometer (Φ-OTDR) distributed optical fiber measurement system for safety early warning and leak location for city water pipeline. By analyzing the different characteristics of time domain signal, the signal power spectrum, information entropy, space frequency energy distribution, and high-pass filter, we conduct safety early warning and location of pipeline leak. Based on the deep analysis and comparison of the various signal parameters, the space frequency energy distribution is considered as an effective and reliable parameter used for the safety early warning and location of pipeline leak. The experimental results show that positioning error is less than 10 m within 2000 m measurement range based on the method.