In magnetic flux leakage testing, the lift-off effect shows that testing signal voltages vary with lift-off values. This has many adverse effects on detection and evaluation. This paper proposes a novel method for linearization of the lift-off effect in the spatial domain. The spatial analytical expression is obtained through magnetic dipole theory and the Fourier transform method. An analytical method to linearizethe lift-off effect is proposed. Further, the finite-element method and discrete Fourier transform method are applied to linearize the lift-off effect. Experimental studies are also conducted to verify the analytical results. The linear fitting function of the lift-off effect takes the form of Y = AX + B. When the spatial frequency ω is 35 mm−1, the linear fitting results of the simulation and experiment are Y = −0.23596X−2.0268 and Y = −0.23511X + 4.8152. The goodness of fit R2 is 0.9997 and 0.9975. The results show that the lift-off effect can be linearized in the spatial domain. The coefficient A is slightly affected by the defect size. The coefficient B is strongly related to the defect size. We consider these results to be quite significant.