Nano-ZnO powder was synthesized by the plasma vapor-phase reaction (PVPR) process. Most of the ZnO particles obtained are rod-like, with diameters of between 20 and 100 nm. ZnO-based varistors were fabricated by using the synthesized nano-ZnO powder and commercial French process submicrometer ZnO powder, respectively. The sintering activity of the samples prepared with the nano-ZnO powder is higher, but there is only a little difference between the mean grain sizes of the samples sintered at the same temperature. The current-voltage (I-V) characteristics in the low-current region are similar. However, when subjected to surge currents, the residual voltage ratio of the samples prepared using the PVPR ZnO powder is much lower. Comparative analysis of the dielectric property and the grain-boundary barrier height reveals that the donor concentration of the ZnO crystal grains in the sample prepared using the PVPR ZnO powder is higher than that prepared using French process ZnO powder. A higher donor concentration gives rise to a higher grain conductivity, a higher nonlinear coefficient in the high-current region and a better protection level in applications.