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As transformers age, their internal condition degrades, which increases the risk of failure. To prevent these failures and to maintain transformers in good operating condition is a very important issue for utilities. Traditionally, routine preventative maintenance programs combined with regular testing were used. The change to condition-based maintenance has resulted in the reduction, or even elimination, of routine time-based maintenance. Instead of doing maintenance at a regular interval, maintenance is only carried out if the condition of the equipment requires it. Hence, there is an increasing need for better nonintrusive diagnostic and monitoring tools to assess the internal condition of the transformers. If there is a problem, the transformer can then be repaired or replaced before it fails. An extensive review is given of diagnostic and monitoring tests, and equipment available that assess the condition of power transformers and provide an early warning of potential failure.