In this research, ZnO–Bi2O3–Mn2O3 varistors manufactured from 20 nm ZnO powder and doped with different amounts of Er2O3 were fabricated via the conventional ceramic processing method. The effect of various Er2O3 concentrations (0.5–2.0 mol%) on the sintered density, structural improvement, and nonlinear behavior of the 20 nm ZnO–Bi2O3–Mn2O3 varistors was discussed. Different Er2O3 concentrations exerted considerable influence on the varistors. The addition of large amounts of Er2O3 led to the inhibition of grain growth by increasing the amount of the Er2O3‐rich spinel phase. X‐ray diffraction analysis showed that the addition of Er2O3 to the varistor systems led to the development of Er2O3‐rich phases during sintering. During sintering, the considerable surface area of the nanoparticle powder resulted in numerous interactions in the surfaces of the ceramics manufactured from 20 nm ZnO powder. The electrical behaviors of the varistors were substantially influenced by Er2O3. E1 mA evidently increased from 2,144.7 to 5,482.2 V/mm with the increment in doping amount. The nonlinear coefficient also dramatically increased with the increase in Er2O3 content. The ZnO nanoparticle–Bi2O3–Mn2O3 varistors doped with 1.0–2.0 mol% Er2O3 possessed high voltage and nonlinearity and were stable against DC‐accelerated aging stress.