Over the past decade, multilayer ceramic capacitors (MLCCs) have been able to achieve very high volumetric capacitance due to continuous improvement in their process technology. However, the performance of these devices is severely limited by the presence of electrode defects such as electrode porosity and roughness. To assess the effect of microstructure on MLCC performance, two sets of multilayer capacitors subjected to different processing conditions are compared for their microstructure and electrical properties. It is shown that more continuous and planar electrode morphology leads to lower local electric fields and thus, superior performance. These computational predictions are verified using electrical property measurements. Capacitors with higher electrode continuity exhibit proportionally higher capacitance, provided the grain-size distributions are similar. From the leakage current measurements, it is found that the Schottky barrier at the electrodedielectric interface controls the conduction mechanism. This barrier height is adversely affected by the microstructural defects such as electrode discontinuities and roughness. These results are further supported by frequency-dependent impedance measurements.