Light detection and ranging (LIDAR) is an active remote sensing system. Lidar echo signal is non-linear and non-stationary, which is often accompanied by various noises. In order to filter out the noise and extract valid signal information, a suitable method should be chosen for noise reduction. Some denoising methods are commonly used, such as the wavelet transform (WT), the empirical mode decomposition (EMD), the variational mode decomposition (VMD), and their improved algorithms. In this paper, a new denoising method named the WT-VMD joint algorithm based on the sparrow search algorithm (SSA), for lidar signal is selected by comparative experiment analysis. It is shown that this method is the most suitable one with the maximum signal-to-noise ratio (SNR), the minimum root-mean-square error (RMSE), and a relatively small indicator of smoothness when it is used in three kinds (50, 100, and 1000 pulses) of simulate lidar signals. The SNR is increased by 138.5%, 77.8% and 42.8% and the RMSE is decreased by 81.8%, 72.0% and 68.8% when being used to the three kinds of cumulative signal without pollution. Then, the SNR is increased by 83.3%, 60.4% and 24.0% and the RMSE is decreased by 70.8%, 66.0% and 50.5% when being used to the three kinds of cumulative signal with aerosol and clouds. The WT-VMD joint algorithm based on SSA is used in the denoising process for the actual lidar signal, showing extraordinary denoising effect and will improve the inversion accuracy of the lidar signal.