Aiming at the nonlinear frequency tuning issue of the internal modulation tunable laser source(TLS) in conventional Optical Frequency Domain Reflectometry(OFDR) systems and its further influence on the diminish of signal to noise ratio, an OFDR system based on optical IQ modulation is proposed. The principles of the optical IQ modulation and the basic OFDR sensing system is analyzed. The frequency sweeping laser source based on optical IQ modulation and the OFDR temperature variation positioning system are established. The system utilizes optical IQ modulator to modulate frequency stabilized laser for linear frequency sweeping laser generation. The linear frequency sweeping laser is injected into the OFDR system to locate temperature variation on fiber under test(FUT). The experiment results demonstrate that the OFDR system based on optical IQ modulator is capable of sensing and locating the temperature variation on FUT with high accuracy. A temperature variation localization sensing with 0.0606m sensing error is achieved on an 1000m length fiber. The research shows that the optical-IQ-modulation based OFDR system can realize a temperature variation positioning function at a middle or long distance with high accuracy.