The effects of Sc2O3 on the properties of (Co, Nb)-doped SnO2 varistors were investigated. It was found that by characterizing the samples, sintered at 1300 °C, the nonlinear coefficient presents a peak of α=28.6 for a concentration of 0.05 mol % Sc2O3. The average grain size decreases from 2.9 μm to 1.5 μm, and the breakdown electrical field increases from 655 V/mm to 2197 V/mm. The relative electrical permittivity decreases from 7574 to 792 on increasing Sc2O3 from 0.05 mol % to 0.08 mol %. The increase of the breakdown electrical field with increasing Sc2O3 concentration is mainly attributed to the decrease of the grain size. The reason why the permittivity decreases with increasing Sc2O3 concentration originates from the ratio of the grain size to the barrier width. To illustrate the grain-boundary barrier formation of (Sc, Co, Nb) doped SnO2 varistors, a modified defect barrier model was introduced, in which the negatively charged acceptors substituting for Sn ions should not be located at the grain interfaces, but at SnO2 lattice sites of depletion layers instead.