Numerical simulation on the heat transfer characteristics of transformer oil based on carbon nanotubes in the winding was carried out. The simulation results predict the location and magnitude of hot-spot temperature. The volume fraction of carbon nanotubes is 0.5%. The velocity and turbulence kinetic energy of nanofluid are higher than those of normal transformer oil, which results in the hot-spot temperature of nanofluid drops down to 13% of the normal hot-spot temperature. The numerical results also indicate that a higher flow rate gives a more efficient cooling of the winding since the temperature distribution is more uniform and the hot-spot factor is reduced.