Most present studies on the acoustic emission signals of rotating machinery are experiment-oriented, while few of them involve on-spot applications. In this study, a method of redundant second generation wavelet transform based on the principle of interpolated subdivision was developed. With this method, subdivision was not needed during the decomposition. The lengths of approximation signals and detail signals were the same as those of original ones, so the data volume was twice that of original signals; besides, the data redundancy characteristic also guaranteed the excellent analysis effect of the method. The analysis of the acoustic emission data from the faults of on-spot low-speed heavy-duty gears validated the redundant second generation wavelet transform in the processing and denoising of acoustic emission signals. Furthermore, the analysis illustrated that the acoustic emission testing could be used in the fault diagnosis of on-spot low-speed heavy-duty gears and could be a significant supplement to vibration testing diagnosis.