TiO2-based capacitor-varistor ceramics doped with Er2O3 were prepared and the microstructures and nonlinear electrical properties were investigated. The results show that there exist second phase Er2TiO3 on the surface of TiO2 grains. The grain size was found to decrease with increasing Er2O3 content. The addition of rare earth oxide Er2O3 leads to increase the nonlinear coefficient and the breakdown voltage. It was found that the nonlinear coefficient presents a peak of α = 4.5 for the sample doped with 1.1 mol% Er2O3, which isconsistent with the highest grain boundary in the composition. In order to illustrate the role of grain boundary barriers for TiO2-Ta2O5-Er2O3 varistors, a grian boundary defect barrier model was introduced.