Monitoring and diagnosis of transformers have been investigated and discussed for many years. While transformer routine tests indicate electrical and also insulation weakness or defects, Frequency Response Analysis (FRA) as a modern test can indicate mechanical defects in transformer active part. This paper introduces the concepts behind online measurements in frequency domain and is striving to open the discussion doors towards advanced investigations which are all aligned with smart grid concept. This study has also concentrated partly on issues rising while online transfer function measurement techniques are going to be applied on transformers with various kinds of winding connections and accessories. In the end, crucial issues from theoretical and also practical perspectives for online transfer function implementation are discussed.