Early applications of lightning arresters were hindered not only by high cost, but also by the general lack of knowledge of both the characteristics of lightning and the protective characteristics of the arresters themselves. Present knowledge of these factors, however, achieved as a result of extensive field and laboratory research, has made possible the production of arresters having greatly improved characteristics and at much lower costs, which has led to their extensive use for protecting transformers and other equipment. This paper presents a brief review of the history of lightning arresters, and discusses factors affecting their economic application to electric power systems.