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This paper addresses the critical challenge of detecting, separating, and classifying partial discharges in substations. It proposes two solutions: the first involves developing a signal conditioning system to reduce the sampling requirements for PD detection and increase the signal-to-noise ratio. The second approach uses machine learning techniques to separate and classify PD based on features extracted from the conditioned signal. Three clustering algorithms (K-means, Gaussian Mixture Model (GMM), and Mean-shift) and the Support Vector Machine (SVM) method were used for signal separation and classification. The proposed system effectively reduced high-frequency components up to 50 MHz, improved the signal-to-noise ratio, and effectively separated different sources of partial discharges without losing relevant information. An accuracy of up to 93% was achieved in classifying the partial discharge sources. The successful implementation of the signal conditioning system and the machine learning-based signal separation approach opens avenues for more economical, scalable, and reliable PD monitoring systems.