An on-line monitoring system based on ultra high frequency (UHF) partial discharge (PD) measurements was developed for power transformers. The UHF PD signals were coupled by a UHF sensor and preprocessed by peak envelope detection technique. The system has high sensitivity, strong ability of interference suppression and well real-time capability according to the simulated experiment in lab and field test of a power transformer. Experimental results showed that the forepart PD faults could be discovered by the analysis of UHF PD signals. The on-line monitoring system has already been applied on a power transformer for years.