<p>Moisture is a critical contaminant in oil-filled transformers, significantly impacting the dielectric strength and longevity of both liquid and solid insulation systems. While mineral oil remains the predominant insulating fluid due to its proven performance, the growing interest in environmentally friendly alternatives has driven research into green insulating fluids such as coconut, jatropha, and palm oil. A key challenge in ensuring transformer reliability is understanding the moisture saturation limit of the oil, which varies with temperature, oil type, aging, and chemical composition. Traditional parts-per-million (ppm)-based moisture measurement often fails to reflect actual saturation status under dynamic operating conditions. Water activity (<i>a</i>_w) has emerged as a superior metric, offering real-time insight into the risk of free water formation and enabling more reliable transformer condition assessment and maintenance strategies. This review highlights the significance of monitoring moisture solubility in both mineral and ester-based oils, discusses measurement techniques—including sensor technologies like the Vaisala HUMICAP®—and identifies critical research gaps in evaluating the moisture-holding capacity of emerging biodegradable transformer oils.</p>