Partial discharge (PD) is a primary factor leading to the deterioration of insulation in electrical equipment. However, it is hard for traditional methods to precisely extract PD signals in increasingly complex engineering environments. This paper proposes a new PD signal denoising method combining Aquila Optimizer–Variational Mode Decomposition (AO-VMD) and K-Singular Value Decomposition (K-SVD) algorithms. Firstly, the AO algorithm optimizes critical parameters of the VMD algorithm. For the PD signal overwhelmed by noise, the AO-VMD algorithm can decompose it and reconstruct it by using kurtosis. In this process, the majority of the noise is removed, and the characteristics of the original signal are shown. Subsequently, the K-SVD algorithm performs sparse decomposition on the signal after OA-VMD, constructs a learned dictionary, and captures the characteristics of the signal for continuous learning and updating. After the dictionary learning is completed, the best matching atoms from the dictionary are selected to precisely reconstruct the original noiseless signal. Finally, the proposed method is compared with three traditional algorithms, Adaptive Ensemble Empirical Mode Decomposition (AEEMD), SVD-VMD, and the Adaptive Wavelet Multilevel Soft Threshold algorithm, on the simulated signal and the actual engineering signal. The results both demonstrate that the algorithm proposed by this paper has superior noise reduction and signal extraction performance.