The mineral or synthetic oil is mostly being used in conjunction with paper as the dielectric medium in most of the high voltage equipment. However, impact on environment, lack of petroleum oil reserves and disposal problems with used oils, have prompted researchers to direct their focus onto biodegradable and renewable insulating materials. The new insulating liquid materials development is guided by multiple factors such as environmental requirements and other safety and economic considerations. Therefore transformers manufacturer have to face new specifications related to these new requirements. The Vegetable-oil based transformer fluids increasingly replacing mineral oil-based products in the market place. They are successful because they perform better than mineral oil products and they provide definite environmental and safety gains. This paper reviews the current status of vegetable oils use as transformer oil, including their production, processing, and characterization. The vegetable oils most used as transformer oils are presented and their main advantages described in comparison with mineral oil. The various experimental work carried out in different countries is described, giving an overview of the current research carried out on the vegetable oils. In addition scope and challenges being faced in this area of research are clearly described.