<p>This paper introduces a capacitive sensor designed to monitor insulation degradation in transformer oil. The health of the insulating oil was evaluated by detecting changes in moisture levels and 2-Furaldehyde (2-FAL) concentrations. Moisture and 2-FAL concentrations are key by-products that result from the breakdown of cellulose paper used in the insulation of transformer windings. An accurate and precise capacitive sensor was developed with a parallel two-finger design, incorporating a composite acrylic polymer layer between the upper porous copper and lower nickel electrodes. The sensor was successfully tested for moisture across a temperature range of 0–90&#xa0;°C and for 2-FAL concentrations at room temperature using nine oil samples with various 2-FAL levels, consistently delivering reliable results. Moisture measurements were compared with the Karl Fischer titration (KFT) method, and the 2-FAL concentration measurements were compared with the HPLC method. Experimental results showed strong linearity between capacitance and moisture and 2-FAL concentrations, with sensitivities of 0.0050 pF/ppm for moisture and 0.0631 pF/ppm for 2-FAL. The sensor output demonstrated good accuracy for both parameters: 0.0861% for moisture and 0.003% for 2-FAL concentrations. The sensor achieved a repeatability (%RSD) of 0.0316% for moisture and 0.0933% for 2-FAL, with an average deviation from the initial output of 0.0449 pF for moisture and 0.0023 pF for 2-FAL. The proposed sensor offers an economical and reliable solution for real-time transformer oil monitoring, making it possible to detect moisture and 2-FAL concentrations in transformer oil.</p>