A diaphragm-based interferometric fiberoptic 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.