This paper presents the noise reduction of power quality measurement with time-frequency (T-F) depth analysis. Noise reduction is achieved with wavelet transformation by decomposition, thresholding and lossless reconstruction of signal. Three main problems with T-F noise reduction with wavelet transformation are: defining thresholding levels, level of decomposition and number of wavelet vanishing moment. In this analysis decomposition level and number of vanishing moments are defined via simulation for pure sinusoid signal, these values are used for signals with perturbations and they provide reasonable results. Analysis is conducted by simulating various change of parameters and then approved by laboratory measurement with calibrators and precision measurement equipment. The paper describes a method for noise reduction of signal without prior knowledge of noise level or signal amplitude. Proposed method is able to separate noise without adding phase shift for diverse signal conditions, harmonics, interharmonics, dips, swells and dynamic variations.