Abstract: As for the investment decision-making problems of equipment selection in the process of distribution network upgrade, the important power transformer equipment is taken as the research object. Then, by considering the dynamic changes of the whole life cycle cost (LCC) which affected the power transformer equipment, the system dynamics theory and method are used to build the system dynamics model of whole life cycle cost of power transformer equipment. This mode can be used to simulate and calculate full cycle cost of power transformer, and provide a reference for selecting power distribution network equipment. In the end, a case about retrofit projects in an area is given, and the dynamic model of whole life cycle of transformer system is built and simulated. The results show that the system dynamics method is used to reflect the transformer LCC change process, which not only can consider the change factors (such as electricity, failure rate, etc.) that affect the cost in the process, but also can reflect the change process of LCC and its component factors can be intuitively reflected through the model simulation results.