Deteriorated transformer oil is classified as hazardous waste under national regulations. However, if properly managed, it also can be transformed into a valuable recyclable resource. The main reason is that high water content in the oil leads to a decline in insulation performance, rendering it unsuitable for transformer applications. Therefore, this study presents the development of a novel nano titanium dioxide-loaded silica gel sphere (nTDSGS) adsorbent material aimed at effectively removing trace water from transformer oil. It systematically investigated the preparation method of this material, utilizing tetrabutyl titanate and silica gel spheres as raw materials, along with hydrochloric acid and ethanol solutions. The mixture was subjected to thermal treatment at 500 °C for 4 h in a tube furnace. Following drying, a white powder of the new adsorbent was successfully obtained. The final product was characterized using scanning electron microscopy, element analysis, thermogravimetric analysis, and X-ray photoelectron spectroscopy. The adsorbed experiment examined various factors, including the stoichiometry of reactants, the amount of tetrabutyl titanate, the initial water content in the oil, and various materials, employing response surface methodology to derive optimal reaction conditions and application ranges. The results demonstrated that the adsorption efficiency exceeded 80%, with the water content in the treated transformer oil falling below the national standard threshold (GB/T 7600, <35 μg/mL). Furthermore, gas chromatography−mass spectrometry analysis revealed no significant changes in the primary components of the transformer oil before and after treatment, ensuring the quality of the oil meets industrial application requirements. Regeneration experiments indicated that after each use, the adsorbent underwent drying and heating treatments, maintaining 80% of its initial efficiency even after six regeneration cycles. The adsorption mechanism was explored, suggesting that silicon and titanium atoms form a Bronsted acid structure, which chemically adsorbs hydronium ions and physically adsorbs water molecules. In conclusion, this novel adsorbent material demonstrates remarkable potential in the treatment of transformer oil containing trace amounts of water. It not only alleviates the environmental pollution associated with the degradation of oil quality that can render it hazardous waste but also contributes to the regeneration and sustainable utilization of oil resources.