Abstract: The phase-sensitive optical time-domain reflectometry (Φ-OTDR) sensing system has the characteristics of high dynamic response and high sensitivity, and has great potential in the field of large-scale engineering structural health monitoring. The instrumentation level and engineering application of Φ-OTDR systems depend to a large extent on digital signal processing (DSP) technology. This paper compares and analyzes the main digital signal processing methods and technologies of Φ-OTDR systems in signal quantization, demodulation, noise suppression, and pattern recognition in recent years. The importance and method of combining digital signal processing with industry background knowledge in engineering applications are expounded, and the development status and trend of the digital signal processing methods in Φ-OTDR systems are summarized and prospected.