In the process of oil recovery,the depth monitoring of the oil well's fluid level is very important to ensure the safe production of the oil well. When the acoustic method is used to measure the dynamic liquid level depth of oil well, the coupling wave and the liquid level echo of the acoustic signal received by the wellhead are easily interfered by the noise due to the influence of the complex structure in the casing. As a result, it is difficult for the traditional signal processing method to calculate the velocity and travel time of the acoustic wave, so the dynamic liquid level depth of oil well can not be obtained. In order to solve this problem, this paper firstly conducts Butterworth low-pass filter for coupling wave, and uses short-time mean amplitude difference function to obtain the average sampling times of coupling wave, so as to calculate the propagation velocity of acoustic wave in oil well. On this basis, the liquid level echo was denoised by wavelet, and the liquid level echo position was obtained by using the wavelet singular value detection method, so as to calculate the time difference between the detonation wave and the liquid level echo position, and then realize the detection of the dynamic liquid level depth of oil well. In order to compare the processing effect more intuitively and conveniently, this paper designs a visual data processing software based on Matlab. This paper selects multiple sets of acoustic signals obtained from oil production sites for testing. The results show that the absolute measurement error is controlled within 1 meter, and the relative error does not exceed 0.075%. Compared with other signal processing methods (relative error range 0.3% ~ 0.5%), the proposed method has less error and can better meet the needs of actual engineering.