A distributed optical fiber sensing (DOFS) system based on a bidirectional sensing structure and filtering effect of an unbalanced Mach–Zehnder (M-Z) interferometer is proposed and demonstrated. Unlike the M-Z interferometric DOFS system, in this system, the sensing fiber is not in the interferometer, but in series with the interferometer. The M-Z interferometer is employed to only convert the optical phase fluctuation caused by an external disturbance acting on the sensing fiber into the optical intensity change due to its comb filtering effect. Disturbance location can be realized by cross-correlating the two output signals of the sensing system and obtaining their time difference. Experimental results show that the location error is less than 5 m for the 5.7 km-long sensing fiber. The system is feasible in disturbance detection, accurate and repeatable in location results. The detection sensitivity is adjustable by changing the arm length difference of the M-Z interferometer and the frequency response is wideband.