ZnO based surge arresters are non-linear devices which protect electrical equipment against overvoltages. The material in such equipment (called varistor) has two main components: conducting ZnO grains and non-conducting Bi2O3 grain boundaries. At low voltages, the electrons are trapped in the conducting parts and the material acts as an insulator. In this regime, the leakage current through the grain boundaries must be as small as possible. When the voltage crosses the so-called breakdown voltage, the electrons overcome the potential barriers of the boundaries and the material becomes a good conductor. The transition between the insulating and the conducting state, which is characterized by the nonlinear alpha coefficient of the current-voltage relationship (I proportional to V-alpha). must be as fast as possible in order to protect the electrical equipment adequately in cases of rapid overvoltage fluctuations. The breakdown voltage depends on the number of potential barriers per unit length and, therefore, on the size of the ZnO grains. Typical commercial varistors use micron size ZnO particles as starting materials and the final grain size after sintering is of the order of 8 mu m. The corresponding breakdown voltage is around 2 kV/cm which is equivalent to a voltage drop of 1.6 V per inter-granular barrier. Usually, they are sintered at temperatures above 1200 degrees C in order to reach densities close to the theoretical limit. In this paper, we will show that by using high energy ball milling, it is possible to change and control the ZnO grain size and, therefore. the breakdown voltage by an order of magnitude while keeping good electrical properties and high density. The sintering temperature can be reduced by at least 200 degrees C. The paper will discuss the influence of various processing parameters on the microstructure, density and electrical properties (breakdown voltage, alpha coefficient, etc.).