CP-Nb-Cr/Cu-Cd electrical contact material, which contains 1.7wt.% of Cd, 0.5wt.% of CP (man-made diamond particles), 2.0 wt.% of Nb and 0.7 wt.% of Cr, was fabricated by powder metallurgy process. The contact material was installed in different ac contactors covering current range from 40 to 630A. While tested under AC-4 electrical load, the electrical contact material was worn out gradually by repeated electrical arc, and microstructure of the arc-affected surface layer changed dramatically. Mechanism of arc erosion process and contact resistance fluctuation was discussed by corresponding microstructure observation and chemical composition analysis of the surface layer. CP-Nb-Cr/Cu-Cd electrical contact material is capable to be used in 63~250A ac contactors under AC-4 working conditions.