Partial discharge (PD) in electrical equipment is one of the major causes of electrical insulation failures. Fast and accurate positioning of PD sources allows timely elimination of insulation faults. In order to improve the accuracy of PD detection, this paper mainly studies the direction of arrival (DOA) estimation of PD ultrasonic signals based on a step-by-step over-complete dictionary. The simulation results show that the step by step dictionary can improve the operation speed and save signal processing time. Firstly, a step-by-step over-complete dictionary covering all the angles of space is established according to the expression of the steering vector for a matching pursuit direction finding algorithm, which can save computation time. Then, the step-by-step complete dictionary is set up according to the direction vector, and the atomic precision is respectively set to 10°, 1° and 0.1°. The matching pursuit algorithm is used to carry out the sparse representation of the received data X and select the optimal atom from the step-by-step complete dictionary, and the angle information contained in atoms is DOA of the PD sources. According to the direction finding results, combined with the installation location of the ultrasonic array sensor, the spatial position of a partial discharge source can be obtained using the three platform array location method. Finally, a square ultrasonic array sensor is developed, and an experimental platform for the ultrasonic array detection of partial discharges is set up and used to carry out an experimental study. The results show that the DOA estimation method based on a step-by-step over-complete dictionary can improve the direction finding precision, thereby increasing the subsequent positioning accuracy, and the spatial position estimation error of the PD source obtained under laboratory conditions is about 5 cm, making this a feasible method.