The invention relates to a system and a method for distribution network fault locating based on an improved double-terminal traveling wave method. The system comprises a terminal measurement module and a control center host computer, wherein the terminal measurement module is composed of a sensor module, a microprocessor module, a wireless communication module and a power supply module. The method comprises the following steps: a current traveling wave signal measured by a current transformer is calculated to obtain each current phase with a time scale; the phase current is decoupled, and a line mode component is selected as a traveling wave propagation mode for fault locating; an obtained traveling wave signal is uploaded to the control center host computer; the head of a travelling wave is detected, and rapid intrinsic mode decomposition is carried out on the line mode component; the arrival time of the travelling wave is determined; the wave speed is measured; and a fault is located. By adopting the system and the method of the invention, higher detection accuracy is achieved, the consistency of wave speeds of a fault traveling wave in three line sections formed by a fault point and three measuring points is ensured, and accurate online fault traveling wave speed determination is realized.