Highly non-linear varistors with a up to 45 are prepared from polycrystalline ZnO by the addition of less than 2 mol.% MCoO3-x (M = Ba, Sr) as the only formulating phase. Non-linearity is observed only when the ZnO raw material powder has controlled zinc excess non-stoichiometry (4-13 ppm), induced by pre-annealing. High non-linearity is observed only when the oxygen deficiency is low (x < 0.15) in the additive phase. Non-linearity is also found to depend on controlled processing parameters, namely sintering temperature (about 1100-degrees-C), faster tooling rates (above 40-degrees-C min-1) and post-sinter heat treatment. Maintenance at a higher temperature than that of sintering for 10-30 min and cooling at 100-120-degrees-C min-1 produced the maximum a value. The microstructural, electron paramagnetic resonance (EPR) and reflectance spectral studies indicate the prevalence of higher concentration of Co(III) as well as barium ions at the grain boundary regions. Charge compensation of Co(III) by zinc vacancies renders the grain boundary regions more insulating. However, the grain interiors are conducting because of the higher concentration of frozen-in donor-type defects. The participation of the V(Zn)-O' type hole centres in the non-linear conduction is indicated from the EPR results.