Extraordinary room-temperature CO sensing capabilities have been surprisingly discovered for Pd-SnO2 composite nanoceramics, yet the mechanism behind them is still largely unknown. In this work, some interesting insights into the room-temperature CO sensing behaviors of Pd-SnO2 system have been revealed through a comparative study among samples of different Pd contents and different heat-treatment temperatures. Pressed compacts of Pd-SnO2 nano-mixtures with 0.125–10 wt% Pd have been prepared and heat-treated in air over a wide temperature range of 600–1200 °C. While most samples show no responses to CO at room temperature, those of relatively low Pd content (≤ 2 wt%) and heat-treated at unusually high temperatures (e.g. ≥ 1000 °C for samples of 2 wt% Pd) exhibit extraordinary room-temperature CO sensing capabilities, such as a response of 5, a response time of 30 s and a recovery time of 40 s for 0.005% CO – 20% O2 – N2. X-ray photoelectron spectroscopy analyses indicate that Pd2+ is present in all heat-treated samples, but Pd4+ can only be detected in those samples with extraordinary room-temperature CO sensing capabilities. Further experiments suggest that SnO2 plays an indispensable role in forming Pd4+ in Pd-SnO2 system at unusually high temperatures, and Pd4+ leads to extraordinary room-temperature CO sensing process via CO chemisorption on SnO2. These results clearly show a magic effect of charge states of catalysts on the performance of room-temperature metal oxide gas sensors and highlight the importance of creating novel chemical states of catalysts under some unusual conditions.