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Generally, impregnation of solid insulation is performed to increase the dielectric strength and reduce the dielectric losses of solid insulants. This increase in dielectric strength depends on the oil’s diffusion and dielectric properties. This paper investigates the diffusion behavior of mineral oil and ester fluids (synthetic, natural, and mixed) to understand the influence of oil diffusion on paper breakdown voltage. To better understand this phenomenal influence, cellulose insulation paper of different thicknesses has been considered. Wetting characteristics of various oil-paper insulation systems were investigated with and without thermal stressing. Thermal aging was carried out as per modified ASTM D1934 at 110 °C, 140 °C, 160 °C, and 185 °C respectively for 2 weeks. The wetting characteristics and influence of different oils on paper breakdown voltage were explicitly reported. It is inferred that paper wetting characteristics are attributable to the type of oil, the thickness of paper, and the aging factor of oil-paper insulation. Importantly, the increase in paper dielectric strength and diffusion behavior for ester fluids is found to be superior to that of the mineral insulating oils.