Transformers are essential parts in the power system for voltage level conversion and maintaining the power flow in the electrical power system, the stability of which is significant for the reliability of the whole supply. The oil used in all transformers is used for insulating and cooling purposes. Degradation of transformer oil occurs because of the ageing, high temperature and chemical reactions such as the oxidation. It is also affected by contaminants from the solid materials. Therefore, the oil condition must be checked regularly and reclaimed or replaced periodically, to avoid the sudden failure of the transformer. In this paper, breakdown voltages (BDV) as well as dielectric dissipation factor (Tan δ) at some different oil conditions are measured. The effect of temperature variation, particle existence in the oil and the water content are studied. The results explain that the aged oil at 80oC (heated for two hours) provides a good dielectric strength than that fresh oil. The particles in the oil play an important part for decreasing the BDV as well as giving worst value of tan δ.