Cellulosic pulp has been processed into insulation paper since the earliest days of electrical engineering. This polymer synthetized by nature has proved to be competitive to man-made plastics throughout the last century and is still widely used in electrical power transformers. The high working temperatures prevailing in such apparatuses and the desired lifespans of up to 40 years shifted the thermal stability of cellulose to the center of attention of many researchers. In this literature review, a summary of theories and recent insights regarding the processes upon thermal degradation of cellulose in the temperature range relevant for electrical power transformers is given, followed by an overview of strategies to improve the thermal stability of cellulosic insulators. Special emphasis is placed on the discussion of additives and modification agents and their action modes, and on the understanding how successful upgrading of cellulose towards high thermal stability is achieved.