The research about online monitoring and leakage automatic location of water distribution networks (WDN) has a wide range of applications that include water resource protection, monitoring, and allocation. Variational mode decomposition (VMD) and cross-correlation (CC) based leakage location is a popular and effective method in WDN. However, the value of K intrinsic mode functions (IMFs) based on VMD decomposition needs to be determined artificially, which affects the separation effect of signal frequency band characteristics directly. Hence, this work proposes an adaptive method to determine the parameter K of leakage vibration signal’s IMFs, which will be applied to automatic leakage location in WDN. Firstly, the number of saddle points in the frequency domain envelope of the sampled signal in different step sizes is calculated. The parameter K is determined according to the curvature change of the number of saddle points and the sampled signal. Finally, the selective IMFs are reconstituted into a new signal, which can determine a leak position using CC based time-delay estimation (TDE). To verify the effectiveness of the proposed algorithm, the different methods based on EMD and Fast ICA are compared. The experimental results demonstrate that the proposed parameter K value adaptive VMD (KVA-VMD) decomposition method is more suitable for leakage location in WDN.