This paper dealt with the acoustic detection of partial discharge (PD) in insulation oil for insulation diagnostics of oil immersed transformers. Electrode systems such as needle to plane, plane to plane, and floating were fabricated to simulate some defects in transformers. A wide band acoustic emission(AE) sensor with the frequency ranges of 100 kHz~1 MHz and a narrow band AE sensor with the resonant frequency of 140 kHz were used in the experiment. Also, a decoupler and an amplifier were designed to detect and amplify the acoustic signal only. The decoupler separates acoustic signal from DC source without any distortion, and the amplifier has the gain of 40 dB in frequency ranges of 11 kHz~4 MHz. In the experiment, frequency components and propagation characteristics of acoustic signal were analyzed, and an algorithm of positioning of PD occurrence by the time difference of arrival was proposed. From the results, the frequency components of the acoustic signal exist from 50 kHz to 200 kHz and the positioning error of PD calculated by three AE sensors was within 1%.