This paper presents the development of Bay Control Unit for Power Transformer to build up substation automation system. The substation automation including digital control and monitoring of electric machine is widely spreading more and more, the degree of automation is more sophisticated and automation functions are required increasingly. These requirements of related power industries and customers can be satisfied by advanced digital IEDs such as digital protection relay, bay controller, PLC, communication devices, etc. By the fusion of state of the art technologies such as microprocessor, digital control, digital communication with conventional power industry, we can build a more effective, reliable, economic, convenient substation and power system. Nowadays, lots of power transformers are installed with a digital IED called Bay Control Unit. Bay Control Unit can simplify the conventional local control panel which is full of analog devices and lots of cables. It also make easy to install, test, maintain and any kind of change of power transformer and its control scheme. As long as the IEC61850 that is international communication protocol for substation automation is becoming popular, it is expected that digital IEDs will be used dominantly. We developed and are testing a Bay Control Unit, which can be specifed by IEC61850 communucation, flexible IO, module based structure, convenient control method. In this paper, we will describe modular structure, flexible IO and powerful flexible logic function combined with the dedicated PC application program. And we also explain the application and result. This technology can be also used in digital protection relay, RTU, PLC etc, so we expect it can improve the functionality, specification, and convenience of digital IEDs.