Abstract: In this paper the harmonic-balanced finite element method (HBFEM) was applied to study the DC bias phenomenon in power transformers. Variables in electric circuits and magnetic field were represented in harmonic forms duo to the periodic characteristic of electromagnetic field under steady-state excitation. The harmonic-balanced finite element equation was set up by means of the harmonic decomposition of magnetic reluctivity, considering the coupling of electric circuit and magnetic field. The harmonic solutions of exciting current and magnetic vector potentials were calculated directly to analyze the relationship between DC bias and DC flux. The local vortex characteristic of flux distribution in each harmonic was also presented. An Epstein frame-like core model was applied to carry out the DC bias experiment. A good agreement between calculated results and experimental data proves the effectiveness of HBFEM in the investigation of DC bias phenomenon.