With the development of distribution Internet of things, the workload of judging and maintaining running state of sensors is quite considerable after large-scale construction of sensing layer. Moreover, promotion of long-distance low-power sensors puts forward the requirements of low energy consumption and bandwidth reduction for communication network between “side” and “end”. This paper proposes a state fusion evaluation method of multi-source sensors and data fusion compression method of low-power wireless sensors under the new inspection mode of distribution Internet of things. Taking the sensor system in Jiangsu power distribution substation as an example, the validity of state fusion evaluation of sensors is verified. The application of fusion compression algorithm can keep waveform characteristics and reduce data flow by 99.3%, which is more suitable for low-power and long-distance wireless transmission.