To overcome those disadvantages that BP (Back Propagation) neural network and conventional Particle Swarm Optimization (PSO) converge at the global best particle repeatedly in early stage and is easy trapped in local optima and with low diagnosis accuracy when being applied in converter transformer fault diagnosis, we come up with the improved PSO-BP neural network to improve the accuracy rate. This algorithm improves the inertia weight Equation by using the attenuation strategy based on concave function to avoid the premature convergence of PSO algorithm and Time-Varying Acceleration Coefficient (TVAC) strategy was adopted to balance the local search and global search ability. At last the simulation results prove that the proposed approach has a better ability in optimizing BP neural network in terms of network output error, global searching performance and diagnosis accuracy.