When a transformer is loaded, with a constant supply voltage, the terminal voltage changes due to voltage drop in the internal parameters of the transformer *i.e. *primary and secondary impedances (resistances and inductive reactances). It is observed that the secondary terminal voltage drops from its no load value (E_{2}) to load value (V_{2}) as load and load current increases. The algebraic difference between the no-load and full-load terminal voltage is measured in terms of voltage regulation (known as voltage regulation of transformer).

The regulation is defined as change in magnitude of the secondary terminal voltage, when full load *i.e. *rated load of specified power factor supplied at rated voltage is reduced to no load, with primary voltage maintained constant expressed as the percentage of the rated terminal voltage.

Let, E_{2} = secondary terminal voltage on no load

V_{2} = Secondary terminal voltage at given load

then mathematically voltage regulation at given load can be expressed as,The ratio of (E_{2} – V_{2}/ V_{2}) is called per unit voltage regulation.

The secondary terminal voltage does not depend only on the magnitude of the load current but also an the nature of the power factor of the load. If V_{2} is determined for full load and specified power factor condition the voltage regulation is called full load regulation.