Based on the research of signal similarity evaluation criterions, Local Wave time-frequency coherence method is proposed, and is further applied in the fault diagnosis of reciprocating compressor cylinder. Firstly, double channel signals of cylinder and valve are synchronously sampled. Secondly, cyclic cross-correlation function is used to eliminate the time delay between these signals. Finally, Local Wave time-frequency coherence method is utilized to remove the interference components from cylinder signal. Thus, more concise and precise working condition information for cylinder and inner components can be obtained.