As cable laying distances in modern urban distribution networks continue to expand, the accuracy of fault location via frequency-domain reflectometry (FDR) diminishes markedly with increasing length. To improve precision for long cables, this study proposes a maximum-entropy spectral-estimation-based method. A high-frequency distributed parameter model for distribution cables is developed to quantitatively assess the impacts of insulation aging and mechanical damage on per-unit-length capacitance and inductance. Drawing on transmission line theory, the relationship between the reflection coefficient spectrum and the defect position is derived, along with a step-frequency optimization criterion to enhance spectral resolution. To mitigate spectral leakage and limited resolution in fast Fourier transform (FFT)-based frequency-domain analysis, the maximum entropy spectral method is employed for high-fidelity spectrum estimation, thereby elevating fault distance localization accuracy. Simulations reveal that, relative to conventional FFT, the proposed method reduces location errors by 2–4.5 times in typical long-cable cases. Experimental results confirm a relative error below 0.25% for the maximum entropy approach, surpassing the conventional method's error under 0.55%, thus validating its efficacy and superiority in engineering practice.