This work aims to study the effect of Mn2O3 additions on the electrical properties and microstructure characteristics of a SnO2-based ceramic varistor system doped additionally with Sb2O5, Cr2O3, and CoO. The specimens were prepared using conventional ceramic processing and homogenized by a high-energy ball milling system using the following composition: (98.99-X) % SnO2 – 0.05% Cr2O3 – 0.05% Sb2O5 – 1.00% CoO – X% Mn2O3 where X = 0.00, 0.05, 0.10, 0.20, 0.50 and 1% mol. Characterization by TG-DSC/DTA, XRD, XPS, and SEM/EDS, and the proposed chemical and defect-formation reactions allowed the conclusion that Mn2O3 additions produce alterations of the microstructure consisting of the in situ formation of the spinel Co2MnO4 secondary phase and modification of the potential barriers in the intergranular regions, where, in addition, oxygen vacancies are formed. With the 0.05 mol % Mn2O3, the grain size (average in the range of 2–3 μm) drops by 20 %, thus augmenting the grain boundaries. Altogether, this leads to a decrease in the nonlinearity coefficient (α) and an advantageous displacement of the breakdown electric field (EB). The 0.05 mol % Mn2O3 specimen compares favorably with the reference material by surpassing the EB value by a factor of 8. Elucidation of Mn2+ and Co2+ in 1 mol % Mn2O3 specimens by XPS suggests the role of MnO and CoO as intermediate phases, essential for Co2MnO4 formation. The pathway for in situ formation of Co2MnO4 is set forth based on the above characterization techniques in conjunction with proposed chemical and defect-formation reactions.