Appropriate dispersants for the dispersion of gallium zinc oxide (GZO) nanopowder in aqueous suspensions were identified in this study. The dispersion efficiencies and stabilization mechanisms of water-based dispersants ammonium poly(acrylic acid) (PAA-NH4), an anionic polyelectrolyte, and polyethylenimine (PEI), a cationic polyelectrolyte, were compared. The experimental analyses of rheology and sedimentation showed that both PAA-NH4 and PEI were good dispersants for the dispersion of GZO. Theoretical calculations based on Derjaguin-Landau-Verwey-Overbeek theory revealed that the stabilization mechanism of PEI was mainly related to the steric effect, and a very low molecular weight of 1800g/mol was insufficient for powder stabilization. GZO was well dispersed by PEI with high molecular weight of 10000g/mol, but agglomeration occurred when too much PEI was added. Compared with PEI, PAA-NH4 was more efficient because of its high contribution to the increase in electrostatic repulsion. Based on theoretical considerations on both steric and electrostatic effects, namely, the electrosteric stabilization mechanism, PAA-NH4 is optimal for the dispersion of GZO nanopowder in aqueous suspensions.