Reactions between Ag-Pd internal electrode materials and{{{{ { {Bi }_{2 }O }_{3 } }} in multilayer chip varistor were in-vestigated. For more than 1 mol%{{{{ { {Bi }_{2 }O }_{3 } }} in varistor composition internal electrode structure was destroyed due to the reaction between internal electrode and{{{{ { {Bi }_{2 }O }_{3 } }} But for typical varistor compositions (below 1 mol% of{{{{ { {Bi }_{2 }O }_{3 } }} content) microstructural changes around the internal electrode were not observed. However SEM-EDS and TEM-EDS analysis showed the uneven distribution of{{{{ { {Bi }_{2 }O }_{3 } }} in the internal electrode which was due to the migration of{{{{ { {Bi }_{2 }O }_{3 } }} to the electorde during sintering. As a results the nonlinear coefficient of multilayer varistor showed very large distribution as well as the breakdown voltage.