The evaluation of the failure probability is essential in the reliability‐centered and risk‐based maintenance of power transformers. The breakage of the pressboard in disc‐type transformers is one of the critical factors determining the lifetimes of power transformers. In this paper, a hierarchical method for evaluating the probability of pressboard failure, which is the breakage of the pressboard, in power transformers that considers the axial displacement of the winding is introduced. In the method, the diagnosis of the axial displacement is classified into three distinct classes. In class 1, no diagnosis is implemented, and the probability of failure is evaluated with the maximum possible axial displacement. In class 2, the diagnosis determines whether the winding is axially displaced. When the winding is diagnosed to be displaced, the probability of failure is evaluated with the maximum possible axial displacement. In class 3, the axial displacement is diagnosed quantitatively, and the probability of failure is then evaluated using the diagnosis result. Examples of the evaluated probabilities of pressboard failure are introduced, and the extension of the evaluated lifetimes of power transformers via the diagnosis of winding axial displacement is demonstrated. © 2021 Institute of Electrical Engineers of Japan. Published by Wiley Periodicals LLC.