To tackle the challenge of exhaust gas leak detection, this paper proposes an exhaust gas leakage detection method based on distributed fiber optic vibration sensing technology. Firstly, sensors are mounted on the vehicle’s exhaust pipe to detect variations in both intensity and phase of the optical fiber light signal, which arise from local pressure disturbances associated with exhaust gas leaks. A distributed vibration sensing system that utilizes a dual Mach-Zehnder interferometer setup is applied with a differential cross-correlation algorithm for demodulating vibrations captured at both ends. Secondly, a cross-correlation delay algorithm is used to precisely pinpoint any leakage locations. In simulation test, leak scenarios are emulated using a piezoelectric ceramic device along with a designated fiber length of 2 m, achieving remarkable positioning accuracy of 0.01 m and validating the feasibility of this proposed method.