In the era of Industry 4.0, there is a growing emphasis on the digitization of electrical networks. Over recent decades, the integration of interconnected digital technologies, including sensors and communication systems, within electrical substations has emerged as a significant driver. Consequently, there is an increasing need for precise online monitoring of critical assets such as power transformers to enhance grid reliability. This study utilizes an optical‐based Fiber Bragg Grating (FBG) sensor to capture vibration signals from a custom‐designed single‐phase transformer model, specifically developed for experimental purposes. This model offers a unique advantage with its ability to interchangeably simulate healthy and distorted winding sections without causing damage. Using a high current source, the laboratory model was subjected to three different current levels across six distinct configurations to monitor winding displacements. The results from this investigation highlight the FBG sensor's capability to accurately distinguish between healthy and distorted winding sections. Furthermore, this feasibility study represents a significant step forward in the online mechanical assessment of transformer windings, moving away from traditional methods that require transformers to be taken out of service for inspection. This innovative approach shows considerable potential for implementing effective real‐time monitoring of winding deformation in power transformers.