The dielectric strength / breakdown voltage of an insulating oil is a measure of the oil's ability to withstand electrical stress without failure. The test involves applying an AC Voltage at a controlled rate to two electrodes immersed in the insulating fluid. The gap is a specified distance. When the current arcs across this gap the voltage recorded at that instant is the dielectric strength breakdown strength of the insulating liquid.

Contaminants such as water, sediment and conducting particles reduce the dielectric strength of an insulating oil. Combination of these tend to reduce the dielectric strength to a greater degree.

Clean dry oil has an inherently high dielectric strength but this does not necessarily indicates the absence of all contaminates, it may merely indicate that the amount of contaminants present between the electrodes is not large enough to affect the average breakdown voltage of the liquid.