This paper has proposed an on-line method of partial discharges (PDs) detection. Fundamental difficulty in PD measurement is that PD signal is so minute that can be easily contaminated by huge amount of noise and this makes PD detection rather obscure. Thus, noise reduction algorithms have been extensively deployed to mitigate the noise. Among which, Digital Signal Processing (DSP) techniques are becoming more and more applicable. Compared by linear predictor and Least Mean Square (LMS), a wavelet-based noise reduction algorithm has been utilized. Some significant considerations in wavelet denoising such as selection of level of decomposition and reconstruction, mother wavelets, methods of signal extension, thresholding criterion have been discussed deeply. In order to prove the effectiveness of our algorithm, real data extracted from an 11kV cable has been used.