This paper presents the development and rigorous testing of an advanced current transformer (CT) terminal inspection system, signifying a major leap in electrical engineering diagnostics. Originating from the need to enhance the reliability and safety of electrical power systems, this system addresses the critical challenge of accurately identifying CT terminal conditions, which are fundamental for the proper functioning of protective relays and metering equipment. Utilizing state-of-the-art microcontroller and sensor technologies, the system precisely identifies the polarity and terminal configurations of CTs. A series of 20 trials were conducted on a varied selection of transformers, analyzing four crucial parameters: CT size and capacity, core material composition, turn ratio, and manufacturer-specific differences. The outcomes consistently highlighted the system’s superior diagnostic capabilities, accurately determining CT terminal conditions and polarity. The system’s design ensures efficient and safe operations, especially in complex and hazardous settings. These findings underscore the system’s reliability and robustness, indicating its potential as an indispensable tool for maintaining operational integrity and safety in various electrical applications. The successful development and validation of this system mark a notable advancement in the field, offering new avenues for enhanced diagnostics in electrical engineering.