The paper summarizes operating experience with transformer oils from the aspect of sludge formation and the increase of acidity with life, and it describes tests designed to study the correlation of increasing acidity found in service with predictions of performance based upon the Michie sludge test.The basis of selection of transformers and oils for these tests—which were initiated in 1943—is given, and themethod of preparing the transformers is described.Acidity values are discussed from the aspect of working conditions and transformer site. The results show a trend towards greater deterioration of oils yielding higher acidity values in the sludge test, and B.S. 148: 1933 has been revised to exclude such oils. It is concluded that, under normal operating conditions, oils complying with B.S. 148: 1951 may give satisfactory service, with the minimum of maintenance, for the whole of the expected life of the transformer.