Bi2O3 was added into nickel copper zinc niobium ferrite and treated with different thermal processes to change the grain-boundary chemical composition. The relationship between the grain-boundary composition and varistor properties were investigated using scanning electron microscopy, transmission electron microscopy, energy dispersion spectroscopy, and X-ray photoelectric spectroscopy. The experimental results show that Bi2O3 reacts and diffuses into the spinel ferrite grain, forming bismuth iron compounds, causing the spinel ferrite chemical composition near grain boundary becomes iron deficient. The Fe deficiency spinel ferrite near the grain boundary then changes into p-type conduction. The annealing process after sintering improves the bismuth oxide diffusion and chemical reaction near the grain boundary, which can increase the grain-boundary resistivity. The n-type semiconductive grain interior and p-type spinel ferrite near the grain-boundary combination can form a double Schottky barrier, leading the specimen to exhibit varistor properties. A multifunctional varistor-magnetic material with a nonlinear coefficient of 10 and initial permeability of about 225 at 10MHz can be successfully fabricated by sinteringNi(0.2881)Cu(0.1825)Zn(0.4802)Nb(0.0096)Fe(2.0168)O(4) ferrites added with 5mol% Bi2O3 sintered at 950 degrees C, then annealed at 650 degrees C for 1h.