The presence of moisture in a power transformer is harmful to its oil–cellulose system and can also accelerate the ageing. Therefore, it is necessary to estimate the moisture content inside the transformer. Due to the variation of loading conditions and ambient temperatures, moisture is neither in a static state nor uniformly distributed in transformers. Moisture migrates between oil and cellulose and moves inside oil and cellulose of transformers. Moreover, given the complexity of a transformer's structure, moisture distribution is also a function of mass and dimensions of transformer's oil–cellulose system. This study adopts a multi-physics modelling approach to investigate moisture dynamics in transformers. In this approach, moisture dynamics is investigated by coupling electromagnetic, thermal, fluid flow and moisture migration physics simultaneously. An accurate estimation on moisture distribution in transformers can then be obtained. Extensive ageing and moisture diffusion experiments have been conducted on a prototype transformer to verify the proposed approach.