A newly developed Ag5wt%C electrical contact material was fabricated using the technique of high-energy in conjunction with reductant liquid spraying chemical coating and powder metallurgy. Compared with its conventional counterparts made from traditional blending and extrusion, the new contact material has excellent physical and mechanical properties. Contact-erosion experiments were performed using an ASTM Contact Material Automatic Measuring Device. The experimental results indicated that the arc erosion resistance of the newly developed Ag5wt%C material was more than 40% higher than that of the conventionally blended counterpart. The microstructures of the AgC coating powder and the sintered-pressed sample were characterized by SEM and metallographic microscopy. The surface morphologies of the two types of Ag5wt%C contact after breaking arc melting were examined by SEM together with EDS. It was found that the melted Ag particles produced by arc thermal shock become spherical and adhered to the matrix, thereby decreasing the splattering loss of Ag. The wettability and interfacial strength between silver and graphite were much improved as a result of using the new technique. The newly developed AgC may substitute for those counterparts made from extrusion or blending as a new electrical contact material.