Abstract: To address the challenge of detecting and locating local leakage points in large-area impermeable geomembranes during reservoir impoundment, a method is proposed for damage detection and localization using underwater acoustic signals generated by geomembrane failure. Laboratory experiments in an anechoic water tank and field tests at a reservoir were conducted, in which multiple hydrophones were employed to synchronously acquire acoustic signals, and a source localization algorithm based on the Generalized Cross-Correlation with Phase Transform (GCC-PHAT) and time difference of arrival (TDOA) was applied. Laboratory results indicate that the failure-induced acoustic signals are predominantly concentrated in the 200–500 Hz frequency band, and within a distance range of 5–44 m, the peak sound pressure levels range from 160.90 dB to 169.41 dB, attenuating with propagation distance. Because the frequency spectrum of the damage signal does not overlap with that of the ambient noise in the reservoir, spectral subtraction can effectively suppress the background noise. Both laboratory and field test results confirm that the proposed method achieves satisfactory localization accuracy within a range of approximately 50 m, and that the accuracy can be further improved by increasing the number of hydrophones.