An important indicator of quality testing for guns is gas groove detection. In light of the limitations of existing detection methods, this paper presents a new type of gas groove detection method based on gun barrel structure and gas groove shape and location. The detection principle is presented based on linear variable differential transformer (LVDT). Signal analysis principle is described, including wavelet domain denoising, discrete wavelet transform based detrending, and undecimated wavelet transform based peak detection. Practical applications are provided to demonstrate the validity of this new detection method. By achieving a detection accuracy of 1 μm, this method has high precision and efficiency compared with other detection methods.