In view of the shortcomings of the traditional optical fiber loss tester, such as long preheating time and great influence of temperature change on the output power of the infrared light source, a scheme of modulating the infrared light source with sine wave signal was proposed. This method can effectively solve these problems and achieve good test results. Firstly, three kinds of sinusoidal wave signal generation methods were introduced, among which the direct digital frequency synthesis (DDS) method produces sinusoidal wave with high frequency resolution and frequency stability. Secondly, the internal structure and conversion principle of DDS chip AD9832 were introduced. The sinusoidal wave signal generated by the DDS chip was applied to the infrared optical loss tester. The changes of the infrared light source power before and after the sine wave signal modulation and before and after the preheating were compared. The results show that the stability of infrared light source after sinusoidal wave modulation is better than that before modulation, and it is more convenient for users to quickly measure the optical fiber loss.