ZnO varistor ceramics with a high potential gradient, as well as a high nonlinear coefficient, were reported and analyzed in this paper. With the use of nano-sized ZnO powders, the average grain size was reduced to about 2.6 μm, which successfully raised the potential gradient to 1172 V/mm. Moreover, the nonlinear coefficient increased to 48, and the leakage current was decreased to 8.4 μA/cm2 by doping a moderate amount of MnO (0.9 mol%). This was proven to be caused by the high Schottky barrier height formed at the grain boundary, where the Mn element segregated and, consequently, led to the increased density of interface states. Therefore, this could be considered as a potential method to simultaneously enhance the potential gradient and the nonlinear coefficient of ZnO varistor ceramics.