In view of the difficulty in determining the number of mode components K and penalty factor α in VMD, which leads to poor signal decomposition effect and low diagnosis and recognition rate due to insufficient feature extraction in AC arc fault, an arc fault diagnosis method based on the Aquila algorithm was proposed to optimize the multivariate feature extraction of variational mode decomposition. First of all, the arc fault test platform was set up to consider the resistive, inductive, capacitive, and other household loads were considered to obtain the normal and fault current data. Second, the optimal K and α parameters were obtained by AO-VMD optimization and then decomposed into intrinsic mode functions (IMFs) by substituting them into VMD. Then, the time domain characteristics of the IMF2 component, the Energy Entropy of IMFs, and the Fuzzy Entropy of the kurtosis maximum IMFk component were extracted respectively, and the multidimensional fault characteristic matrix was constructed. Finally, the random forest (RF) model was used to accurately identify arc faults. The experiment shows that the average fault recognition rate of each type of load is above 99%, which has an excellent diagnostic effect.