The fiber-optic sensor based on Mach-Zehnder interferometer is used in the perimeter alarm system. It can be used for alarming the vibration signal which occurs in the sensing area and has a very high sensitivity. In order to reduce the false alarm rate of perimeter alarm system，for signal processing of perimeter alarm system，by applying the wavelet transform method, the voltage signal outputted by the perimeter alarm system is identified, which could not only filter the noise signal but also retain mutant signal and distinguish very well the vibrations produced by deliberate invasion and rain to reduce false alarm rates of the perimeter alarm system and realize the deliberate invasion positioning. It is a breakthrough for the perimeter alarm system to realize engineering application. A large number of experimental results showed that it could reflect the singular value of measurement signals and remarkably reduce the false alarm rate of perimeter alarm system based on wavelet transform method to analyze signal of perimeter alarm system.