A diaphragm-based interferometric fiber optic sensor that uses a low-coherence light source was designed and tested for on-line detection of the acoustic waves generated by partial discharges inside high-voltage power transformers. The sensor uses a fused-silica diaphragm and a single-mode optical fiber encapsulated in a fused-silica glass tube to form an extrinsic Fabry-Perot interferometer, which is interrogated by low-coherence light. Test results indicate that these fiber optic acoustic sensors are capable of faithfully detecting acoustic signals propagating inside transformer oil with high sensitivity and wide bandwidth. (C) 2003 Optical Society of America.