As an innovative vibration sensor, distributed optical fiber has been applied in intrusion detection, health monitoring of large-scale buildings for many years. This paper attempted to broaden its application to the condition monitoring of power transformers, since the optical fiber sensing has the natural advantages in anti-electromagnetic interference and distributed imaging. To achieve this objective, an optical fiber distribution system based on ∅-OTDR technique was designed, which was able to localize the vibration point within 5m in length. A novel reeling method considering longitude and latitude arrangement was proposed to further improve its vibration space resolution. In the meantime, the vibration characteristics of a damaged transformer winding were analysed in terms of contour images. Comparing to those obtained from numerical models, failure indicators were summarized based on image features, which were sensitive to winding deformation or insulation aging. Finally, a self-developed imaging software based on OpenGL and PyQt was introduced which further validated its application feasibility.