In this thesis, power system transients are considered as an opportunity for development of on-line diagnostics of power components and specifically the insulation systems of power transformers and bushings. A new technique for on-line dielectric response measurement of power transformer bushings is proposed which utilizes natural transients in the power system, such as lightning and switching surges, as stimuli. Laboratory investigations are done on implementation of the proposed technique. Measurement considerations, data acquisition and processing involved in achievement of reasonable accuracy in the Dielectric Response (DR) are presented. Capability of the technique in tracking of the degradation signatures such as moisture content in the insulation has been evaluated and it has shown a good level of accuracy by being compared to the Frequency Domain Spectroscopy (FDS).  The proposed technique is tested on the service-aged 150 kV bushings and feasibility of the technique for monitoring of dielectric properties of power transformer bushings has been assessed; the results are promising for the technique to be used in the real application.  Partial Discharges (PD) behavior under transients has been also studied for different materials in this project. PD behavior of different defects, at different insulation condition, responding to the overvoltage transients in form of superimposed impulses on ac voltages was investigated and it was perceived how their distinctive response and the interpretation of  that, can be useful for their identification. Besides the conventional materials, surface ac PD properties of modified paper with silica and zinc oxide nanoparticles under the superimposed impulses have been assessed in this project. Proper type and optimum concentration level of nanoparticles in the paper are the factors that lead to the improvement of PD behavior in the modified paper under overvoltage transients. / <p>QC 20160525</p>