The invention provides a method for diagnosing internal insulation defects of transformation equipment. The method includes the steps that a three-dimensional diagram of the transformation equipment to be detected is drawn; a heating simulation calculation model is established according to the material attribute and the three-dimensional diagram of the transformation equipment to be detected; an infrared video camera is used for obtaining temperature variation rule information of the surface of the transformation equipment under a plurality of environmental parameters; the heating simulation calculation model is corrected according to the temperature variation rule information; the internal insulation defects of the transformation equipment are diagnosed according to the corrected heating simulation calculation model. The method is suitable for various types of transformation equipment and can be used for determining the equipment operation condition and the severity of internal thermal defects accurately.