Traditional monitoring methods cannot obtain the overall thermal information for power transformers. To solve this problem, a distributed fiber optic sensor (DFOS) was creatively applied inside an operating 35 kV power transformer by highly integrating with the electromagnetic wires. Then, the transformer prototype with totally global sensing capability was successfully developed and it was qualified for power grid application through the strict ex-factory tests. The as designed optical fiber sensor works stably all the time with a temperature accuracy of ±0.2 °C and spatial positioning accuracy of 0.8 m. Based on the obtained internal temperature distribution, Gaussian convolution was further applied for the signal processing and hereby, the hotspots for all the windings and iron cores could be accurately traced. The hottest points were located at 89.1% (55 °C) of the high voltage winding height and 89.7% (77.5 °C) of the low voltage winding height. The actual precise hotspot location corrected the traditional cognition on the transformer windings and it would serve as an essential reference for the manufactures. This new nondestructive internal sensing and condition monitoring method also exhibits a promising future for the DFOS applying in the high-voltage electrical apparatus industry.