<p>This study successfully prepared Ag–SnO₂–Y₂O₃ composite electrical contact materials using hot-press sintering. The effects of different Y₂O₃ contents (ranging from 0 to 4 wt.%) on the microstructure, densification, hardness, electrical conductivity, arc erosion resistance, and mass loss of Ag-SnO₂ composites were investigated. The microstructure analysis showed that appropriate Y₂O₃ addition results in a uniform distribution of SnO₂ and Y₂O₃ particles within the Ag matrix, forming a continuous network structure that can significantly enhance densification, hardness, and electrical conductivity. As Y₂O₃ content increased, physical properties first improved and then decreased. Compared to the Ag–SnO₂ materials without Y₂O₃, the peak samples showed a 1.19% increase in relative density, a 35.98% increase in hardness, and a 15.27% increase in electrical conductivity. Arc erosion tests showed that adding 0.5 wt.% Y₂O₃ stabilized contact pressure, reduced arc energy and arc duration, and lowered both contact and closed resistance, enhancing the material’s stability and durability. Furthermore, mass loss and post-arc erosion microstructural analysis confirmed that the addition of 0.5 wt.% Y₂O₃ optimizes the material’s performance to the greatest extent. Y₂O₃ synergistically interacts with SnO₂ effectively inhibiting silver evaporation and sputtering. This significantly reduces material loss, maintains the integrity of the conductive path and enhances the stability of the material. In conclusion, the addition of 0.5 wt.% Y₂O₃ to Ag-SnO₂ electrical contact material provides the best balance between physical and electrical properties.</p>