Abstract: In order to effectively detect leakage and determine its location in oil pipeline, a sytstem based on the theories of instantaneous negative pressure wave and compensated volume balance is proposed. The system explores blur algorithm and logical diagnosis, and utilizes the three mechanisms of pressure, flow and flow-deviation to implement leak detection and location, seepage detection and leak alarm. The system integrates the application of sensor technology, wireless communication technology, and virtual instrument technology. The system achieves better results in leak detection of high coagulating and thick oil pipeline having low pressure, flow rate and high temperature differences. The system can redisplay leak data and history, and can also calculate, query and print data by means of the database structure. The system achieves real-time data transfer and detection of oil pipelines in LAN by using wireless network.