In order to solve the problem of missing alarm due to the polarization induced fading(PIF) in φ-OTDR fiber-optic distributed disturbance sensor, a space-domain difference based location method was proposed and investigated. By determining the time-domain and space-domain thresholds, respectively, the detected optical intensity was processed by both of current time-domain and our proposed space-domain difference methods. Then, the missing alarm rate induced by PIF can be effectively reduced. The proposed location method was verified by experiment. By a long-term test in the case of space resolution of 50 m and fiber length of 25.05 km, compared with current single time-domain location method, the missing alarm rate is reduced to be 2% from 18.5%, and the accurate alarm rate is improved to be 89% from 76%. The proposed work in this paper can be the theoretical direction and technical reference for optimization and improving performances of φ-OTDR fiber-optic distributed disturbance sensor in practical applications.