Abstract. Large power transformers are the most expensive and strategically important components of any power generation and transmission system. Their reliability has crucial importance for the energy system operation. Insulation breakdown can generate a serious failure of a large power transformer, which causes substantial costs to repair and financial loss due to power outage. Most power utilities are, therefore, highly motivated to assess the actual condition of the transformer insulation system. The majority of transformer condition check methods are only available for off-line periodic diagnostics. The acoustic emission (AE) method as a complex online diagnostics technique to identify evolving failures is proposed. Results of measuring the acoustic signals generated by the presence of impurities in transformer oil and determining the impurities influence on its condition as an indicator of the transformer condition is presented.