For the upgrade of China power grid from the traditional grid to smart grid, there are many requirements of construction and retrofit for the intelligent condition monitoring systems in substations. Base on the analysis of the structure of the intelligent condition monitoring system for substation equipment, this paper put forward a design scheme that met the needs of smart grid. It had been applied in an engineering project for the modeling and application of DL/T 860 standard in the intelligent condition monitoring system. The results show that it can achieve the functions of communication services, devices’ standardization, system interface and master diagnosis functionality. This paper also pointed out the problems in the current application.