In the present work, we have reported that Pd sensitized nanocrystalline SnO2 thin films sputtered at room temperature are quite promising for development of CO gas sensors. The investigation of materials quality and to understand the sensing mechanism, various characterization techniques such as the GIXRD, FESEM, PL and XPS were used. The sensing characteristics of prepared samples have been measured for different concentration of CO gas and at different temperatures. An excellent sensor response (similar to 94.5%) has been achieved for Pd sensitized SnO2 at 100 degrees C temperature for CO gas of 91 ppm concentration than SnO2 thin film (sensor response similar to 13.6%). The maximum sensor responses similar to 99.5% and similar to 84.3% were observed at 200 degrees C temperature, respectively for both samples. Also, a very fast response and recovery time of about similar to 8 s and similar to 15 s was achieved for Pd sensitized SnO2 thin film. Further, it was observed that Pd sensitized SnO2 thin film was highly selective for CO gas compared to NH3, H2S, NO2 and NO gases and highly stable even after preserved for about six months. Thus, rough surface or nano-pillars/cracks on the surface can also improve the gas sensing