A novel method was presented to prepare Ag/SnO2 (12 wt% SnO2) electrical contact materials. First, Ag-SnO2 nano composite powder with 42 wt% SnO2 synthesized by a coprecipitation method was characterized. XRD results reveal that the synthesized composite powder is composed of cubic Ag and rutile type of SnO2. SEM and TEM images show that nano-Ag and nano-SnO2 particles are homogeneously dispersed in the composite powder. The preparation process of nano composite powder was analyzed with the help of the TG-DTA curves of the precipitation. Then, the obtained Ag-SnO2 nano composite powder was mixed with Ag powder to prepare Ag/SnO2 electrical contact materials (ECM) by powder metallurgy process and the prepared Ag/SnO2 electrical contact materials was characterized. The results demonstrate that owing to the higher dispersion of nano SnO2 particles in Ag matrix, the physical properties of ECM prepared by the new method, such as the density, hardness and conductivity are better than that by the traditional method