Based on the combination of Raman scattering and optical time domain reflection techniques, the distributed optical fiber is used for the simulation experiment of leakage detection and location of tap water pipes. The temperature detection signal is obtained under no leakage or slight leakage of a tap water pipe by a distributed optical fiber sensor. In the experiment, the absolute distance method is firstly used for clustering the temperature detection signals to identify whether there is leakage in the tap water pipe or not. Then, as for the no-leakage signals, a selective average threshold method is used for the determination of a threshold signal. Finally, the difference signal between the detection signal and the threshold signal is used for the identification of leakage location of a tap water pipe. The results show that the whole system is stable and can be used to accurately identify the leakage of tap water pipes. Moreover, the use of the selective average threshold method can accurately locate the leakage point.