The arc erosion characteristics of a new type of silver tin oxide contact material fabricated by high-energy ball milling, hot pressing and sintering was investigated. The microstructure of the AgSnO2 materials was characterized. The nano-scaled tin oxide particles dispersed evenly inside silver grains. The molten droplets in the new type contact material decrease obviously and thermal cracks are inhibited on the contact surface, indicating that the silver tin oxide contacts exhibit less arc erosion.