Zinc oxide varistors are electronic ceramic devices processed through conventional ceramic technique. Its primary function is to protect an electrical circuit by limiting transient surges repeatedly without failing thereby enhancing the system reliability. There are various critical parameters of varistors, defined to evaluate the performance characteristics. Investigating the influence o f the compaction and other processing variables and their optimization in terms of the performance characteristics were the primary objectives of this project. Enhanced energy absorption capability of the varistor is highly beneficial either in increasing the reliability of the device and of the system or in reducing its volume providing the same level of protection. Varistor discs capable of absorbing more energy will aid in reducing the cost or be suitable for more demanding applications. Evaluation of the effect of compaction parameters was carried out by varying the pressing load and speed. The influence of holding times in pressing cycle was also studied. In addition to the energy absorption capability, some other important properties of the varistor were also investigated. Statistical approaches such as the response surface methodology and factorial design of experiments were adopted to develop necessary mathematical models on the basis of the experimental data. The reliability of the models were also verified. A correlation of the physical property and the electrical performance of the ZnO varistor with the sintering orientation was established. The analysis by extensive measurement of the microhardness revealed a relationship between the hardness and grindability of varistor. The tensile strength measured on the disc shaped sections of the arrester block was also found to differ significantly. The density gradient of the sintered disc shows a remarkable influence of the sintering orientation of the disc. By microstructural analysis the observed difference was confirmed. A few alternative methods have been suggested to overcome the adverse effects arising from the sintering orientation. In this regard horizontal sintering on Veegroove support was found to be advantageous. Influence of the surface to volume ratio was evaluated by converting the cylindrical discs into hexagonal shape by grinding. A new design with a hexagonal shape has been proposed. The fracture mechanism of the varistor in a high amplitude short duration (HASD) test was studied and a significant role of the stress wave was observed. The celerity measured by a laser beam based technique through the varistor material was found to be in good agreement with the theoretical prediction. An experimental study also revealed the effect of the stress wave. This understanding will lead to a new approach in combating the fracture from the high current pulse.