Abstract: An acoustic/vibrational source at a fixed location will produce false alarm in pipeline leak detection and result in location error while there is a true leakage. To solve this problem, a signal processing method is proposed. This method utilizes the statistical independence between the leakage signal source and the fixed source of interference. An optimal estimate of a leakage signal is obtained by using blind source separation scheme under a certain cost function, then this estimate is used as an input signal for adaptive prediction of the leakage signal exclusive of loss of time delay information. The processing results in actual detections show that this method can effectively remove the fixed source signal of interference within the detection signals without losing the delay information of leakage signal. The results indicate that this method is practical to achieve effective leak detection and accurate location in the presence of fixed source of interference.