A power transformer outage has a dramatic financial consequence not only for electric power systems utilities but also for interconnected customers. The service reliability of this important asset largely depends upon the condition of the oil-paper insulation. Therefore, by keeping the qualities of oil-paper insulation system in pristine condition, the maintenance planners can reduce the decline rate of internal faults. Accurate diagnostic methods for analyzing the condition of transformers are therefore essential. Currently, there are various electrical and physicochemical diagnostic techniques available for insulation condition monitoring of power transformers. This paper is aimed at the description, analysis and interpretation of modern physicochemical diagnostics techniques for assessing insulation condition in aged transformers. Since fields and laboratory experiences have shown that transformer oil contains about 70% of diagnostic information, the physicochemical analyses of oil samples can therefore be extremely useful in monitoring the condition of power transformers.