The dual Mach-Zehnder interferometer-type distributed optical fiber sensing system is susceptible to environmental noise and system noise due to its high sensitivity, which makes a large error in calculating the position of the disturbance signal by direct cross correlation algorithm. The quadratic cross correlation algorithm was used to process the two received signals, and then process the autocorrelation of one signal. The disturbance signal was located by estimating the delay of the two signals. With the improved method, it can reduce the error caused by noise and improve the calculation accuracy. The theoretical simulation and analysis of the algorithm were carried out, and the experimental device was experimentally verified. The experimental results show that compared with the results of using the direct correlation algorithm, the proposed algorithm can effectively improve the positioning accuracy of the disturbance signal and has higher real-time performance.