A prototype data acquisition and processing system is developed for evaluating the insulation condition of a power transformer winding in real-time. The Transformer Insulation Condition Monitoring System (TICMS) evaluates the insulation condition by calculating the winding transadmittance function. The winding transadmittance function is used to fingerprint the insulation system and provides a means of monitoring its condition. The use of a transfer function for evaluating the insulation condition of a power transformer winding was proposed by Malewski and Poulin in 1988 [6, Chapter 1]. The work described in this thesis extends their work in a number of important areas and makes the following contributions to the state-of-the-art. Firstly, the TICMS is able to calculate the transadmittance function to 3MHz, which is sufficient to detect breakdown between individual turns in an Extra High Voltage (EHV) transformer. This is a key distinguishing feature of this work and is important as faults between individual turns can quickly snowball into a catastrophic failure. Previous attempts have been successful at determining the transadmittance function to around 1.5MHz, which only allows breakdown between discs to be detected in an EHV transformer. Second, the TICMS is able to determine the transadmittance function on-line and in real-time for a fully energised transformer. This is another key distinguishing feature of this work as it allows action to be taken to remove a faulty transformer from service prior to catastrophic failure. Previous attempts have calculated the transadmittance function in an offline situation over a period of minutes using pre-recorded data. Recent advances in analog-to-digital converter (ADC) technology and the availability of high speed Digital Signal Processors (DSPs) have made it possible to extend the work of Malewski and Poulin as described above. This thesis describes the key design features of the TICMS which provide it with the ability to determine the transadmittance function over a 3MHz bandwidth in real-time. These features include the application of an excitation with tailored spectral characteristics, a novel transducer arrangement that allows the effective dynamic range of the digitizer to be extended and at the same time online measurements to be performed, a first-in-first-out (FIFO) memory arrangement that allows the high speed data acquisition section to easily interlace to the data processing section, and a powerful 32-bit floating point Digital Signal Processor (DSP) that enables the trans admittance function to be determined in real-time. The graphical user interlace to the laboratory prototype is also presented. Also described are the signal processing techniques, both applied and developed, that are used by the TICMS to determine the trans admittance function in real-time. These include the deconvolution of the voltage and current channel transducer output signals, a radix-2 decimation-in-time (DIT) fast Fourier transform (FFT) algorithm that transforms the voltage and current channel inputs into the frequency domain simultaneously, the calculation of the transadmittance function magnitude and phase from the recorded transients, and a zooming algorithm that is used to accurately determine pole height. The transadmittance function of a 7.5kVA 11kV/230V distribution transformer is determined and compared with that obtained by performing a time consuming sweep frequency test. Artificial faults are inserted into a 2nd 7.5kVA 11kV/230V distribution transformer to establish relationships between the location and size of a fault and the corresponding changes in the transadmittance function. Sets of tests are conducted to evaluate the effect of fault size, fault location, the introduction of simulated partial discharges, and single turn faults. The ability of the system to detect single turn faults is a key feature as this allows faults to be detected before they can snowball into catastrophic failures. The effect of temperature on the location and height of poles in the transadmittance function of a 7.5kVA 11kV/220V distribution transformer is established through the use of the TICMS. On-line testing of an energised transformer is performed to evaluate the effect of supply voltage magnitude, load current magnitude, and the point in the 50Hz AC cycle when the insulation test is initiated. This information allows the system to compare successive transadmittance functions and generate an alarm signal if insulation condition degradation is found to have taken place. This information will allow the system to eventually become a 'black box' that permanently sits beside a transformer continuously evaluating insulation condition.