Lightning strike is one of the main factors affecting power transmission lines and may lead to broken strands and damage of transmission lines, resulting in abnormal power supply. To improve the accuracy of lightning location, this paper presents a polarization optical time-domain reflectometer (POTDR) lightning location method based on orthogonal coding technology. The lightning strike point can be located by detecting the state of polarization (SOP) mutation of Rayleigh backscattering in the POTDR system. The orthogonal coding technology is used to improve the distance and accuracy of POTDR lightning location. Through calculation and simulation analysis, the location accuracy is significantly improved at the same sensing distance compared with the ordinary POTDR lightning location method. The lightning strike location error can be limited to 200 m in 20 km sensing distance which meets the actual engineering needs. The results of this paper are important to improve the operation and maintenance efficiency of transmission lines and reduce maintenance costs in the power industry.