For power system equipment with oil as insulating medium such as power transformer, Dissolved Gas Analysis (DGA) of oil is very helpful method in order to detect faults below oil level. Early detection of fault conditions in a transformer is possible if analysis of gases is done which gets evolved in it. Analysis of the specific value of every gas helps in diagnosing faults. Faults which can be identified by this method include disturbances like presence of corona discharge, partial discharges, arcing and increase in temperature. If correct preventive actions are initiated early for the diagnosis of gases produced, failure to equipment will get prevented. Even though many methods are researched for fault identification and analysis in power transformers, DGA is much superior in comparison with other techniques as it gives more helpful data about the condition of the transformers in running condition. Different techniques, like key gases and their ratio, and their analyzing them graphically are mainly used to understand DGA samples. For a transformer having multiple faults, above methods fail to diagnose. IEC standards are in use for DGA from many years and valuable experience gained over theses years around the world is in use to diagnose internal faults on transformers. IEC three gas ratio technique suggested by IEC is mainly preferred, but in some conditions it can’t correctly identify conditions like no suitable codes for diagnosis and multiple faults. The limitations of the traditional three gas ratio method are: with gas ratio is on the verge of crossing the coding boundary, there is a sharp change in the codes, but actually fuzzied boundary should be used. In this paper, codes "zero", "one", "two" are represented by fuzzy membership functions, then "AND" and "OR" conditions of three gas ratio method are coded into fuzzy logic based statements. MATLAB based scripts prove that the presented technique surely overcome the limitations of the traditional three gas ratio method, hence, it largely reduces the errors in diagnosis. In this paper, a method on the basis of fuzzy logic is explained which is able to identify many faults in oil insulated equipment. The presented diagnosis technique uses values of the ratios C2H4 /C2H6 , C2H2 /C2H4 and CH4 /H2 and the concentration of specific gases namely methane (CH4 ), hydrogen (H2 ), acetylene (C2H2 ), carbon monoxide (CO), ethylene (C2H4 ), carbon dioxide (CO2 ) and / ethane (C2H6 ). Values of these three ratios reflect various patterns of faults inside the transformer. Fuzzy three ratio technique can also quantitatively indicate the likelihood of identified fault with more accuracy as compared to conventional three ratio method. This tool will prove to be very useful to the engineers in DGA result interpretation.