A transmission-type pinhole detection system is proposed for high-speed aluminum foil, which could automatically detect and identify pinhole defects on the aluminum foil strip. The transmitting light passes through the pinholes in the foil strip and forms a bright spot area in the camera image to detect the pinholes. However, the pseudo-defects generated by the external factors will affect the identification of pinhole defects; thus, a unique mechanical device is used to shield the external interference. On this basis, a simple, fast, and effective detection and classification algorithm is adopted to meet the requirements of real-time detection and identification. Subsequently, based on the demand of production application, a novel algorithm to merge pinhole defects is designed. This system has been evaluated and applied in an aluminum plant and the field application results show that it is a stable and reliable system for real-time pinhole detection.