To solve the low accuracy of fire situation assessment, fire alarm and fire source localization during fire detection in the lager room for the regular fire monitoring system due to fire monitoring node isolation, a fire detection and localization algorithm for the large place based on wireless sensor network is proposed in this paper. The artificial neural network is firstly trained by fire data from the wireless sensor node, and the artificial neural network with fuzzy decision is then used to estimate and decide the fire situation. The limited space smoke diffusion model and gas temperature diffusion model are applied to locate fire source and measure the coverage of fire, and it is possible to assess fire situation more accurately in large room, which can provide more information for firefighters to take measures to extinguish fire. The simulation results show that not only single node fire alarm based on neural network has high fire alarm probability but also total fire detect wireless sensor network has high accuracy about fire situation assessment and high accuracy about fire source localization. Theory analysis and experimental results show that the fire detection and localization algorithm is feasible.