Major problem in the high voltage power transmission line is the flashover due to polluted ceramic insulators which leads to failure of equipments, catastrophic fires and power outages. This paper deals with the development of a better diagnostic tool to predict the flashover and pollution severity of power transmission line insulators based on the wavelet transform and fuzzy c-means clustering approach. In this work, laboratory experiments were carried out on power transmission line porcelain insulators under AC voltages at different pollution conditions and corresponding leakage current patterns were measured. Discrete wavelet transform technique is employed to extract important features of leakage current signals. Variation of leakage current magnitude and distortion ratio at different pollution levels were analyzed. Fuzzy c-means algorithm is used to cluster the extracted features of the leakage current data. Test results clearly show that the flashover and pollution severity of power transmission line insulators can be effectively realized through fuzzy clustering technique and it will be useful to carry out preventive maintenance work.