Silver in the form of AgNO₃ was added to ZnO-based varistor ceramics prepared by the solid-state reaction method. The effects of AgNO₃ on both the microstructure and electrical properties of the varistors were studied in detail. The optimum addition amount of AgNO₃ in ZnO-based varistors was also determined. The mechanism for grain growth inhibition by silver doping was also proposed. The results indicate that the varistor threshold voltage increases substantially along with the AgNO₃ content increasing from 0 to 1.5mol%. Also, the introduction of AgNO₃ can depress the mean grain size of ZnO, which is mainly responsible for the threshold voltage. Furthermore, the addition of AgNO₃ results in a slight decrease of donor density and a more severe fall in the density of interface states, which cause a decline in barrier height and an increase in the depletion layer.