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Despite major progress in the design of power transformers, the Achilles’ heel remains the insulation system, which is affected by various parameters including moisture, heat, and vibrations. These important machines require extreme reliability to guarantee electricity distribution to end users. In this contribution, a fiber optic sensor (FOS), consisting of a Fabry–Perot cavity made up of two identical fiber Bragg gratings (FBGs), is proposed, to monitor the temperature and vibration of power transformer windings. A phase shifted gratings recoated sensor, with multilayers of polyimide films, is used to monitor the moisture content in oil. The feasibility is investigated using an experimental laboratory transformer model, especially fabricated for this application. The moisture contents are well correlated with those measured by a Karl Fisher titrator, while the values of temperature compare well with those recorded from thermocouples. It is also shown that the sensors can be used to concurrently detect vibration, as assessed by sensitivity to the loading current. The possibility of dynamically measuring humidity, vibrations, and temperatures right next to the winding, appears to be a new insight that was previously unavailable. This approach, with its triple ability, can help to reduce the required number of sensors and therefore simplify the wiring layout.