Bushings are essential components of power transformers and are one of the common causes of catastrophic failure for transformers. The majority of bushings are as old as the transformers and therefore maintaining and monitoring of bushing condition is essential. The power factor and capacitance (PF&C) are the best indicators of the bushing’s condition. Off-line measurement of the PF&C needs to remove the power transformer from the network and a normal capacitance (NC) must be installed in the substation. In this contribution a novel method for on-line measuring of PF&C for power transformer condenser bushings with the software, hardware and sensors used in this method are introduced. According to laboratory measurement results this method can be used with acceptable accuracy in measurement of PF&C to detect a change in the bushing oil level, an increase in the oil moisture of the bushing and the temperature variation of the bushing oil.