The transformer consists of solid and liquid insulation working in conjunction for its efficient and coherent performance. With the advent of biodegradable natural ester oils as insulants, the utilities and manufacturers are shifting toward retrofilling the old transformers and initiatory filling the new transformers with these ester oils. This study investigates the compatibility of commercial vegetable oil (VO) intended to replace commercial mineral oil (MO) for transformer application. The study also gives an insight on using the blends of MO and VO in various ratios as an alternate insulation with improved dielectric characteristics for transformers. Multiple blends of mineral and natural ester oil are prepared, and their physiochemical, dielectric properties, such as moisture content, ac breakdown voltage (BDV), dielectric dissipation factor (DDF), density, flash point, interfacial tension (IFT), relative permittivity, and specific resistance, are reported. Furthermore, the partial discharge (PD) activity in the blended oils (BOs) is studied using a needle-plane electrode system and a 300-kHz narrowband detector (AES, PDC13). The needle tip has a radius of $20~\mu \text{m}$ and the distance between the electrodes is 50 mm. The partial discharge inception and extinction voltages are interpreted in accordance with IEC 60270 and IEC TR 61294 by increasing the voltage at a rate of 1 kV/s. In addition, the BOs are oxidative aged and their PD activity is investigated to ascertain their long-term performance. The natural ester oil is found to have the highest PD inception voltage (PDIV) among the fresh oils, whereas an equal blend of mineral-natural ester oils is found to have highest PDIV among the oxidative aged oils. The PDs in all the fresh and oxidative aged oils are predominantly found in negative half cycle of the excitation voltage.