Non-local mean (NLM) can significantly improve the signal-to-noise ratio (SNR), but it inevitably reduces the spatial resolution of distributed optical fiber sensors (DFOS), which hinders its practical application and the improvement of DFOS performance. In this paper, the quantitative relationship between the signal broadening of a phase-sensitive optical time-domain reflectometer (φ-OTDR) and the NLM parameters is analyzed to identify the cause and extent of the spatial resolution degradation. The denoising results for the mimic periodic and φ-OTDR vibration signals indicate that the signal broadening is mainly due to the similarity window size of NLM, and the signal amplitude reduction is caused by the Gaussian smoothing parameter. Compared with the reference signals, the signal broadening of the mimic and φ-OTDR signals after denoising are 2.56% and 2.74%, respectively, which is much less than the previous results. The signal amplitude is reduced by 9.25% and 13.62%, respectively. This work promotes the application of NLM and improves the performance of DFOS.