The primary function of insulating oils is to dissipate heat and provide electrical insulation for turn-to-turn windings in power transformers. These oils also serve as a means to monitor the health status of power transformers. At present, most transformer failures are due to the presence of moisture as well as heat, oxidation, and electrical stresses. The main objective of this research was to study the effects of moisture content and temperature on the dielectric strength of transformer insulating oil, which is known be the factors that lead to transformer failures. The effect of moisture content was investigated by varying the amount of distilled water added into the insulating oil samples from 1 mL to 5 mL with 1-mL increments. The effect of temperature was investigated by increasing the oil temperature from 40°C to 120°C with 20°C increments. The dielectric strength of each insulating oil sample was assessed by performing AC breakdown voltage tests according to the MS IEC 60156:2012 standard. With the assistance of FTIR spectra revealed that the chemical compounds of transformer insulating oil were also affected (based on absorption band) due to the presence of moisture and temperature. Based on the results, it can be concluded that moisture and temperature have a significant effect on the dielectric strength and chemical compounds of transformer insulating oil. © 2019 PENERBIT AKADEMIA BARU.