A leak localization method is proposed based on particle filter and compressed sensing for the unexpected leakage in pipeline. Firstly, based on the method of characteristic, the state space equation of the pipeline is formulated. The improved particle filter algorithm is used to estimate the state of the transient process of the leaked pipeline. Mean square error of the estimated and observed values is utilized to locate the leakage point by solving an optimization problem. Then, the leakage rate and leakage coefficient are estimated. To enhance the estimation accuracy caused by collecting, storing and transmitting measurements, compressed sensing is used to preprocess the test data. Experimental results show that the proposed method can locate the leak effectively when the reconstructed signal with a compression rate of 65%75% is used as the input of particle filter. The relative positioning error is about 1%.