Transformer is a static device which is used to transformer the power from one voltage to another voltage level without change in frequency. Mostly in distribution system step down transformers have been used. The distribution transformer or service transformer is a device which provides the final transformation in the electric power distribution system, stepping down the voltage in the distribution lines to the level used by the customer. Transformer is one of the most essential components of the electrical system. It is also called the heart of the electrical systems. Failure of the transformer may lead to the failure of the whole electric system. Which may cause the power loss, production loss and revenue loss? Therefore continuous monitoring and fault detection of the transformer is of prime importance. Many researchers have been developed various tools and technique for fault detection and diagnosis of distribution transformer. The aim of this paper is to detect and analyses the fault in distribution transformer by using the At Mega Arduino 328 pin microcontroller sensor by monitoring the various transformer parameter like moisture, voltage, and temperature with the help of various sensors which are placed internally and externally on the transformer. These sensors are continuously measure and monitor the health of distribution transformer during healthy and faulty conditions. This feature is essential for effective power transmission and long life of the transformer.