Nanosized ZnO powders were prepared with a two-step precipitation method. The average size of ZnO particles was about 80 nm and their size distribution was narrow. Combining with ultrafine additive powders, ZnO base varistor was produced via an oxide mixing route. ZnO varistor derived from normal reagent grade starting materials was investigated for comparison purpose. Outstanding microstructure of the ZnO varistor derived from nanosize ZnO powders and ultrafine dopants was obtained: uniform distribution of fine ZnO grains (less than 3 microns), grain boundary and the dopant position. Higher varistor voltage (U=492 V/mm) and nonlinear coefficient (α=56.2) as well as lower leakage current (TL=1.5 μuA) were achieved. The better electrical properties were attributed to the uniform microstructure, which in turn led to stable and uniform potential barriers. Also this improved technique is more feasible for producing ZnO nanopowders and resulting varistor in large scales. Nanosized ZnO powders were prepared with a two-step precipitation method. The average size of ZnO particles was about 80 nm and their size distribution was narrow. Combining with ultrafine additive powders, ZnO base varistor was produced via an oxide mixing route. from normal reagent grade starting materials was investigated for comparison purpose. Outstanding microstructure of the ZnO varistor derived from nanosize ZnO powders and ultrafine dopants was: uniform distribution of fine ZnO grains (less than 3 microns), grain boundary and the dopant position. Higher The better electrical properties were attributed to the uniform microstructure, which in turn led to stable (V = 492 V / mm) and the nonlinear coefficient and uniform potential barriers. Also this improved technique is more feasible for producing ZnO nanopowders and resulting varistor in large scales.