Moisture content in oil is a crucial quality index to evaluate operation state and prevent faults of transformer. Therefore, it is necessary to study the rapid detection method of water content in the insulating oil. The high sensitivity of terahertz wave to water makes it have unique advantages in the field of material moisture detection. Therefore, this paper introduces terahertz technology into the detection of moisture content in insulating oil.The insulating oil samples with gradient water content were prepared by drying the new insulating oil at different times. The water content of the samples was measured by Karl Fischer titration. The terahertz time-domain spectroscopy of insulating oil with different water content was measured, and the absorption spectrum of the sample was obtained based on the optical parameter equation.Terahertz time domain spectroscopy results show that with the increase of moisture content, the amplitude of oil sample signal decreases and the phase delay increases compared with air signal. The terahertz absorption spectrums show that the absorption coefficient of the oil sample is positively correlated with the increase of water content, and there exists obvious absorption at 0.9 THz, 1.26 THz, 1.6-1.8 THz and 2.0 THz. The calculation and analysis showed that there was a good positive correlation between the moisture content and absorption peak areas of  0.9THz、1.26THz、1.6~1.8THz and 2.0THz.