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A portable fiber-optic spectroscopic system (TRANSPEC) has been developed for nondestructive measurement of aged transformer insulating paper. Following successful measurement of degree of polymerization (DP) of a range of transformer-aged paper samples, the system has now been shown to separate the oil and paper information for measurement of DP in oil-wetted paper samples. In addition, the system has been shown to be capable of the prediction of both oil and water content of paper to a high accuracy, and is also capable of identifying and quantifying different water species. Spectroscopic measurements have been used together with gravimetric water adsorption measurements to investigate the kinetics of uptake of water vapour into paper from air in the case of nominally dry and oil-impregnated samples. Relationships between water adsorption parameters and properties of the paper insulation have also been investigated using measurements under controlled conditions.