A novel wavelet denoising (WD) assisted wavelength modulation technique is proposed for improving near-infrared detection performance on methane concentration based on tunable diode laser absorption spectroscopy (TDLAS). Due to the ability of multi-level analytical resolutions both in time- and frequency-domains, the noise contained in the differential signal is greatly suppressed. Sensor mechanical part, optical part and electrical part are integrated, and a portable detection device is finally developed. Theory and formulations of the WD-assisted wavelength modulation technique are presented, and experiments are carried out to prove the normal function on the extraction of the second harmonic (2f) signal from severely polluted differential signal by using the technique. By virtue of WD’s suppression on noises, the sensing characteristics on CH₄ concentration are improved, and the limit of detection (LOD) is decreased from 4×10^-6 (without WD processing) to 10^-6. The proposed technique can also be used for the measurement on the concentration of other gases with corresponding near-infrared distributed feedback lasers.