The technique of combining histogram equalization and gradient method was proposed for the processing of optical fiber sensor signal in a coherent optical time domain reflectometer (COTDR). Treating the signals detected by the same optical pulse sent into the sensor fiber as a row vector, and the signals of the same position detected by a set of optical pulses as a column vector, a two- dimensional grey scale image is built. Through calculating the gradient of the grey scale image, and then histogram equalization, the noise resulted from the environmental interference is depressed. The resolution is improved. With the proposed method, the vibration signal driven by a piezoelectric ceramic transducer in the COTDR with a 2.5 km length sensing optical fiber is identified well.