Power transformers play a critical role in electric power networks. Such transformers can suffer failures due to multiple stresses and aging. Thus, assessment of condition and diagnostic techniques are of great importance for improving power network reliability and service continuity. Several techniques are available to diagnose the faults within the power transformer. Frequency response analysis (FRA) method is a powerful technique for diagnosing transformer winding deformation and several other types of problems that are caused during manufacture, transportation, installation and/or service life. This paper provides a comprehensive review on FRA methods and their applications in diagnostics and fault identification for power transformers. The paper discusses theory and applications of FRA methods as well as various issues and challenges faced in the application of this method.