In this paper the thermal behaviour of ZnO-based ceramic varistors under alternative voltage in two different environments, oil and air, has been studied. This study was accomplished firstly by short-term purely thermal ageing of varistors in oil and air with applying an electric field; and secondly by long-term ageing of varistors in oil with and without applying an electric field. Several kinds of coated and non-coated varistors were used in this study. The varistors were of a dimension of 40 mm both as diameter and height. It was found that glass-coated varistors have a good thermalperformance in oil, comparing with air; while the resin-coated and non-coated ones exhibit some problems. As well, the degradation of transformer mineral oil in the oilimmersed ZnObased surge arresters has been studied. It can be seen that after longperiod high thermal constraints in oil there is a deposited layer on the varistors' surface which can disturb the function of the non-coated varistors. It is also observed that the ZnO varistor and its coating have an influence on degradation of the oil.