This paper focuses on the realistic remaining service life prediction and monitoring system of power transformers, using an algorithm developed by the authors. The power transformer is one of the vital components of power transmission and distribution substations. It is important to know the loading capacity and remaining service life of a power transformer to ensure its economical and secure operation. This information is directly related to the condition of cellulosic insulation. According to classical method of prediction, the power transformer is considered to be operated under constant load for the remainder of its lifespan. However, in reality the load factor varies continuously, and this is a key factor affecting the service life of power transformers. In this study, a realistic method for monitoring and predicting the service lifetime of power transformers is presented by considering annual load factors. The proposed method is applicable to any power transformer and can be updated by considering relevant standards for different liquid and solid insulation materials. As a case study, life-loss calculation and the remaining service life predictions are carried out using a thermal model that has been created considering a 250 MVA mineral oil-immersed power transformer.