This article makes a comparative analysis of oil-immersed transformers and dry-type transformers. It expounds on the working principles of the two. The oil-immersed transformer relies on insulating oil for cooling and insulation, while the dry-type transformer uses natural air cooling or forced air cooling for heat dissipation. The advantages of the oil-immersed transformer are high heat capacity, high electrical strength, and low cost, while the disadvantages are easy leakage, regular maintenance required, and flammability. The dry-type transformer has the advantages of environmental friendliness, safety, and easy maintenance, but its disadvantages are weak heat dissipation, high cost, and high noise. The oil-immersed transformer is suitable for high-voltage and large-capacity scenarios, and the dry-type transformer is suitable for densely populated areas and places with high environmental protection requirements. In terms of performance, there are differences in heat dissipation, cost, safety, and environmental friendliness between the two. In terms of technological development, the oil-immersed transformer is researching and developing biodegradable insulating oil and optimizing the design, and the dry-type transformer is studying new heat dissipation materials and noise reduction technologies. In short, the two have different characteristics, and when making a choice, multiple factors need to be comprehensively considered, and attention should be paid to new technologies.