A novel distributed optical fiber vibration-sensing system based on Mach-Zehnder interferometer has been designed and experimentally demonstrated. Firstly, the principle of Mach-Zehnder optical path interferometer technique is clarified. The output of the Mach-Zehnder interferometer is proportional to the phase shift induced by the perturbation. Secondly, the system consists of the laser diode (LD) as the light source, fiber, Mach-Zehnder optical interferometers as the sensing units, a 1×N star fiber-optic coupler, an N×1 fiber-optic coupler, a photodiode (PD) detector, and a computer used in signal processing. The entire monitoring region of this system is divided into several small zones, and each small monitoring zone is independent from each other. All of the small monitoring zones have their own sensing unit, which is defined by Mach-Zehnder optical interferometer. A series of sensing units are connected by the star fiber-optic couplers to form a whole sensing net. Thirdly, signal-processing techniques are subsequently used to calculate the phase shift to estimate whether intruders appear. The sensing system is able to locate the vibration signal simultaneously, including multiple vibrations at different positions, by employing the time-division multiplexed (TDM) technique. Finally, the operation performance of the proposed system is tested in the experiment lab with the conditions as follows: the number of the sensing units is 3, the length of the sensing fiber is 50 m, and the wavelength of the light diode is 1550 nm. Based on these investigations, the fiber surrounding alert system is achieved. We have experimentally demonstrated that the sensing system can measure both the frequency and position of the vibration in real time, with a spatial positional resolution better than 50 m in an area of 1 km².