The on-line measurement of hot-spot temperature in transformer winding is an effective factor to identify the insulation condition of power transformer. In this paper, a novel temperature measurement method based on fiber grating is presented. The principle is introduced at first, and then the configuration and key problems are discussed. The on-line measurement of novel method is progressed at last. The testing results show that this new method is accurate and reliable. It will provide powerful support for the insulation condition evaluation of power transformer.