Vibration monitoring and analysis play a crucial role in the fault diagnosis of hydroelectric units. However, accurate extraction and identification of fault features from vibration signals are challenging because of noise interference. To address this issue, this study proposes a novel denoising method for vibration signals based on improved complementary ensemble empirical mode decomposition with adaptive noise (ICEEMDAN), permutation entropy (PE), and singular value decomposition (SVD). The proposed method is applied for the analysis of hydroelectric unit sway monitoring. Firstly, the ICEEMDAN method is employed to process the signal and obtain several intrinsic mode functions (IMFs), and then the PE values of each IMF are calculated. Subsequently, based on a predefined threshold of PE, appropriate IMFs are selected for reconstruction, achieving the first denoising effect. Then, the SVD is applied to the signal after the first denoising effect, resulting in the SVD spectrum. Finally, according to the principle of the SVD spectrum and the variation in the singular value and its energy value, the signal is reconstructed by choosing the appropriate reconstruction order to achieve the secondary noise reduction effect. In the simulation and case analysis, the method is better than the commonly used wavelet threshold, SVD, CEEMDAN–PE, and ICEEMDAN–PE, with a signal-to-noise ratio (SNR) improvement of 6.9870 dB, 4.6789 dB, 8.9871 dB, and 4.3762 dB, respectively, and where the root-mean-square error (RMSE) is reduced by 0.1426, 0.0824, 0.2093 and 0.0756, respectively, meaning that our method has a better denoising effect and provides a new way for denoising the vibration signal of hydropower units.