Abstract: In this study, an investigation was carried out to evaluate the effect of condensed moisture on refined bleached and deodorized palm oil as an alternative dielectric transformer coolant. Dielectric response measurements were carried out temperatures of between 20°C to 140°C. The breakdown voltage and dissipation factor (tan δ) of the oil samples were systematically investigated under the influence of moisture and results compared using ASTM, VDE and IEC standard procedures. Owing to comparable results in the RBDPO and mineral oil (Shell Diala D) studied, it is suggested that treated vegetable oils is a suitable alternative to mineral oil.