Operational reliability evaluation theory reflects real-time reliability level of power system. The component failure rate varies with operating conditions. The impact of real-time operating conditions such as ambient temperature and transformer MVA (megavolt-ampere) loading on transformer insulation life is studied in this paper. The formula of transformer failure rate based on the winding hottest-spot temperature (HST) is given. Thus the real-time reliability model of transformer based on oper- ating conditions is presented. The work is illustrated using the 1979 IEEE Reliability Test System. The changes of operating conditions are simulated by using hourly load curve and temperature curve, so the curves of real-time reliability indices are ob- tained by using operational reliability evaluation. The impact of real-time operating conditions such as ambient temperature and transformer MVA (megavolt-ampere) loading on transformer insulation life is studied The formula of transformer failure rate based on the winding hottest-spot temperature (HST) is given. Thus the real-time reliability model of transformer based on oper- ating conditions is presented. The work is illustrated using the 1979 IEEE Reliability Test System. The changes of operating conditions are simulated by using hourly load curve and temperature curve, so the curves of real-time reliability indices are ob- tained by using operational reliability evaluation.