Dissolved gas analysis (DGA) is widely used in monitoring and diagnosing of power transformer, since the insulation material in the power transformer decomposes gases under abnormal operation condition. Among the gases, acetylene, as a symbol of low energy spark discharge and high energy electrical faults (arc discharge) of power transformer, is an important monitoring parameter. The current gas detection method used by the online DGA equipment suffers from problems such as cross sensitivity, electromagnetic compatibility and reliability. In this paper, an optical gas detection system based on TDLAS technology is proposed to detect acetylene dissolved in transformer oil. We selected a 1530.370 nm laser in the near infrared wavelength range to correspond to the absorption peak of acetylene, while using the wavelength modulation strategy and Herriott cell to improve the detection precision. Results show that the limit of detection reaches 0.49 ppm. The detection system responds quickly to changes of gas concentration and is easily to maintenance while has no electromagnetic interference, cross-sensitivity, or carrier gas. In addition, a complete detection process of the system takes only 8 minutes, implying a practical prospect of online monitoring technology.