Dissolved gas analysis (DGA) is a widely used method for transformer internal fault diagnosis. However, the traditional DGA technology, including Key Gas method, Dornenburg ratio method, Rogers ratio method, International Electrotechnical Commission (IEC) three-ratio method, and Duval triangle method, etc., suffers from shortcomings such as coding deficiencies, excessive coding boundaries and critical value criterion defects, which affect the reliability of fault analysis. Grey wolf optimizer (GWO) is a novel swarm intelligence optimization algorithm proposed in 2014 and it is easy for the original GWO to fall into the local optimum. This paper presents a new meta-heuristic method by hybridizing GWO with differential evolution (DE) to avoid the local optimum, improve the diversity of the population and meanwhile make an appropriate compromise between exploration and exploitation. A fault diagnosis model of hybrid grey wolf optimized least square support vector machine (HGWO-LSSVM) is proposed and applied to transformer fault diagnosis with the optimal hybrid DGA feature set selected as the input of the model. The kernel principal component analysis (KPCA) is used for feature extraction, which can decrease the training time of the model. The proposed method shows high accuracy of fault diagnosis by comparing with traditional DGA methods, least square support vector machine (LSSVM), GWO-LSSVM, particle swarm optimization (PSO)-LSSVM and genetic algorithm (GA)-LSSVM. It also shows good fitness and fast convergence rate. Accuracies calculated in this paper, however, are significantly affected by the misidentifications of faults that have been made in the DGA data collected from the literature.