To solve the problem that the signal collected by Φ-OTDR system contains a lot of random noise, a new noise reduction method based on grey Wolf optimization algorithm and variational mode decomposition combined with singular value decomposition (GWO-VMD-SVD) is proposed. The gray Wolf optimization algorithm is used to find the optimal decomposition layers and the quadratic penalty factor in VMD decomposition, and the mode aliasing phenomenon is suppressed.The permutation entropy determination mechanism is introduced to distinguish the useful signal component from the noise component. The useful signal component is retained, and the noise component is denoised by SVD decomposition to extract the useful signal. The useful signal retained by two denoising is reconstructed and the denoised signal is obtained.Experimental results show that the proposed method has higher SNR than VMD-PE and EEMD-CC, and can retain useful information more effectively.