Transformer oil-paper insulation degrades under operational stresses like voltage and temperature, with water molecules accelerating this process. Using molecular dynamics simulations, this study investigates water migration dynamics and its impact on insulation performance under varying electric fields and temperatures. Results show that at constant temperatures, water diffusion is dominated by thermal motion under low electric fields but becomes constrained as field intensity increases. Cohesive energy density remains stable across fields, while hydrogen bonds increase moderately at medium fields but decline sharply at high fields. The electric field-temperature coupling significantly affects water diffusion and hydrogen bond stability, thereby compromising the oil-paper model’s integrity. This work provides new insights into transformer insulation degradation mechanisms.