Pipeline leak detection has always been a relatively difficult technical problem; especially in urban pipeline leak detection, there are still many problems to be solved. A multipoint leak detection and location method for urban gas pipelines based on variational mode decomposition and relative entropy was proposed. Firstly, the experiment pipeline system was built, and the original signal was collected by acoustic emission technology; then, a variational model method was used to decompose the signal to obtain multiple intrinsic mode function (IMF) components with different characteristic scales. According to the characteristics of relative entropy, each component was analyzed, the appropriate IMF component was selected, and the selected component was reconstructed to obtain the observation signal. The multipoint leakage location model of the urban gas pipeline was established. The number of source signals was estimated by singular value decomposition, and the leakage signals were separated; finally, the accurate location of leakage point was achieved by cross-correlation positioning. The results showed that the average relative error of the pipeline leak location results is 2.97%, and the leak location accuracy is significantly improved, achieving the purpose of precise location.