One of the major causes of failure of converter transformer is the incipient discharges caused due to deterioration of insulation. The insulation in the converter transformers is stressed not only by AC voltages but also with remnant DC voltages. The Acoustic Emission (AE) Technique can identify such incipient discharges in the converter transformer. In the present work, experimental studies were carried out by simulating various incipient discharges such as corona discharge, partial discharge (PD) and surface discharge in an insulation test cell under AC and DC voltages by using AE Technique. The bandwidth of the AE sensor used in the present study is of wide band type and the bandwidth lies in the range of 100 kHz-1 MHz. It is observed that AE signals produced due to different incipient discharges are having different dominant frequency range, amplitude, rise time, number of pulses and energy. To classify the discharges an innovative methodology is adopted by constructing the ternary plot from the FFT output of AE signal generated by the incipient discharges. © 2010 IEEE.