An improved fault localization method combining total aggregate empirical modal decomposition (MEEMD) and Teager energy operator (TEO) is proposed to address the fault localization issue of three-terminal multi-segment overhead line–cable hybrid transmission lines. This method solves the fault localization problem caused by wave impedance discontinuity in hybrid lines. First, the MEEMD algorithm, which improves modal aliasing, and the Teager energy operator, which reflects transient energy changes, are combined for the accurate detection of faulty traveling wave heads. The fault line section determination condition within the fault branch is used to determine the overhead line section or cable section where the fault is located after determining the faulty branch line. This condition is based on the time difference between the initial traveling wave of the fault arriving at each end measurement point and the T-node. Ultimately, the fault distance is determined using the double-ended traveling wave technique. By combining PSCAD and MATLAB for simulation verification, the accuracy of the ranging method is compared and analyzed, and the results show that the method is able to ensure the accuracy of ranging at different fault locations and transition resistances. Additionally, the localization error is basically kept within 30 m, which significantly improves the accuracy of fault localization.