Three kinds of typical insulating oil including mineral oil (MO), natural ester (NE), and mixed insulating oil used in transformers are reviewed. The basic physicochemical, electrical properties and engineering application of the oil were firstly introduced. Then, the nano‐modified mechanism for MO and NE is explored. The effects of various nanofillers on electrical properties, thermal conductivity and ageing stability of MO and NE are compared. Moreover, the preparation process of mixed insulating oil is described, and the enhancement of electrical performance, thermal ageing properties, and kinematic viscosity of mixed insulating oil are analysed. Finally, the performance parameters of nano‐modified MO, NE and mixed insulating oil are analysed, and the future development trend of insulating oil is also discussed.