Four sets of ZnO-based ceramic varistors (reference samples-ZNR; doped with aluminium-AL; doped with silver-AG; doped with aluminium and silver-AA) have been prepared by the conventional mixed oxide route. The current-voltage (I-V) characteristics, determined at current densities up to 1 mA/cm2, yielded nonlinear coefficients (α) of 38, 60, 22 and 56, respectively. Dc and ac degradation tests were performed at 115 °C. Ac impedance analysis was used to determine grain (rg) and grain boundary (Rb) resistances; capacitance-voltage analysis enabled the donor density (Nd) and the barrier height (φ) to be determined. Doping the varistors with Al increased Nd, reduced rg, and improved the I-V characteristics, but caused an increase in Zn interstitials which degraded the stability. In contrast, Ag acts as an amphoteric dopant in ZnO causing a decrease in Nd, an increase in rg and Rb, and a reduction in α ; Ag located in the interstitial sites is able to block the formation and migration of new Zn interstitials, thereby improving the stability. Doping with both Al and Ag at optimum levels gives benefits from both additives, i.e., Al doping (increases Nd and decreases rg) improves nonlinearity, while Ag doping (blocks the formation and migration of Zn interstitials) improves the stability of ZnO varistors.