The failure of power transformers is always an area of significant concern because it can result in substantial financial costs, power interruptions, and potential environmental and safety consequences. Therefore, it is imperative to promptly identify abnormal changes in the transformer’s internal condition and determine whether these changes could lead to an incipient failure. Active detection and identification of incipient faults are now possible through online monitoring of abnormal changes in certain parameters, and the use of analytics and diagnostic methods for failure mode correlation, assessment of equipment condition, and suggested actions. This paper provides an overview of transformer monitoring systems, measured signals, analytics, and diagnostic methods for the identification of transformer failure modes.