This review is conducted following a systematic approach by adopting the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guideline and using reliable and trustworthy databases, namely, IEEE <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">Xplore</i> , Science Direct, and Scopus, with Google Scholar as an additional database. This review has divided into three subsections. The first subsection shows the major publications searching for palm oil (PO)-based as an alternative to biodegradable oil insulation. The second subsection discusses the research trends on PO replacing mineral oil. Finally, the third subsection discusses the development and progress of PO-based nanofluid (NF) as a future substitute for biodegradable oil insulation and the types of analyzes conducted in the studies. This part contains 11 subsubsections, namely: 1) types of PO used; 2) tests of PO as an insulating liquid; 3) properties of PO as an insulating liquid; 4) thermal aging; 5) water content; 6) dissolved gas analysis; 7) selection of nanoparticles; 8) preparation of PO-based NFs; 9) characterization and stability of PO-based NFs; 10) analysis of electrical, physical, and chemical properties; and 11) current status of PO-based insulating liquid in Malaysia. This article highlights PO’s development, trends, and status and its NF as a liquid insulating alternative in transformers. The properties and performance of the liquid are also reported in this article. The promising results, shortcomings, and imbalances between PO and other types of natural ester oils are discussed, and suggestions are made for future work worth exploring.