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The condition assessment of oil–paper insulation is a vital issue in transformer management. To investigate the effect of moisture content on the accuracy of the prediction model, accelerated ageing experiments were performed with different initial moisture content (IMC) in laboratory condition. Two types of multi-parameter lifetime prediction models, e.g. with and without consideration of IMC, were presented for comparison purpose. The authors found that a better accuracy for its prediction results could be achieved by establishing the prediction models with the consideration of IMC. Besides, models considering IMC have better economic feasibility than that without considering IMC(non-IMC) as its total cost is cheaper according to life cycle cost (LCC) calculations. In addition, failure probability based on the proposed prediction models was also calculated as a direct indicator for evaluating the oil–paper insulation status. [ABSTRACT FROM AUTHOR]