Abstract The effect of elevated temperature on the physical and insulating properties of ferrofluid specifically developed for use as a liquid dielectric (D-fluid) for power transformers has been investigated. The D-fluid was produced as a colloidal mix of a specifically synthesized ferrofluid with a conventional mineral oil, and it was subjected to thermal aging conditions modeled after a typical power transformer where the insulation fluid is expected to retain its dielectric performance for about 40 years of continuous service in a sealed tank. The well-known Arrhenius relationship was employed to model “life in service” for up to 40 years at 105°C which corresponded to holding the samples in sealed jars for 10 weeks at 185°C. Another set of small ampules (5 ml) was prepared to test the main physical properties after even longer aging. D-fluid tested after a period of 34 and 50 weeks at 185°C showed no degradation of thermal or colloid stability. The dielectric colloid was also subjected to a 21 day-long test at 110°C in a sealed jar in the presence of typical transformer materials: copper, cellulose, and silicon steel (so-called “bomb” test). Finally, the ferrofluid went through an oxidation stability test (ASTM D2440). Test results show that the newly developed dielectric colloid satisfies the long-term service requirements the transformer users typically apply to conventional mineral oils.