The possibility of enhancing both mechanical and breakdown properties of oil-immersed transformer insulating paper were considered by introduction of cellulose nanocrystals (CNCs). Two kinds of CNCs were taken into account: the TEMPO-oxidized CNCs (T-CNC) and the sulfuric acid hydrolyzed CNCs (S-CNC). Insulating paper containing no CNCs was also prepared as a reference. Obtained samples were characterized by Fourier transform infrared spectroscopy (FTIR), X-ray diffraction (XRD), and scanning electron microscopy (SEM). The effects of different amounts of CNC on tensile strength, AC breakdown strength, oil absorption rate, and conductivity of insulating paper extract were studied. The CNC improved the mechanical and electrical performances of insulating paper, and the effect of T-CNC was a little better than that of S-CNC. When the T-CNC dosage was 0.9%, the tensile strength, AC breakdown strength in oil, and oil absorption rate of the insulating paper were 70.22 N • m/g, 59.8 kV/mm, and 53.1%, respectively, which was improved by 21.7%, 24.6%, and 39.4%, respectively, compared with the reference insulating paper. The beating degree of pulp also affected the mechanical and electrical properties of insulating paper containing CNC. Based on overall performance, it was concluded that CNCs are promising nano-additives for oil-immersed transformer insulating paper, especially for T-CNC.