For recent oscillating wave test system (OWTS) which is used for cable insulation detection, most literatures mainly focus on its brief working principle and field tests. Based on the existing work,the structure, the parameter settings and the detail working principle of OWTS are further analyzed, meanwhile, with the Simulink, OWTS model is built and the process of the partial discharge (PD) signals occurring and detection is simulated; On the base of simulation, a small OWTS is successfully developed, by setting cable point defects artificially, the system was tested and the result shows that the developed system successfully simulates the working process of OWTS and collects the PD signals in accordance with point discharge characteristics, which proves the effectiveness of the developed system.