The present paper reports a highly sensitive room temperature operable ethanol vapor sensor based on the electrical properties of nanostructured Pd-doped SnO2. Pd-doped SnO2 thin films were prepared on the glass substrate (1.2 cm2) using single-step thermal decomposition of stannous chloride (SnCl2) and palladium chloride (PdCl2). The resultant films were characterized by Scanning Electron Microscopy (SEM), X-ray diffraction spectroscopy (XRD), and UV–Vis spectroscopy. The doping of SnO2 with Pd was found to enhance the ethanol sensing response operating at room temperature. The 5% Pd-doped SnO2 sensor showed higher ethanol-sensing performance than the 0, 1, and 3% Pd-doped SnO2 with the sensing range of 10–190 ppm. The response and recovery time at 40 ppm of ethanol gas were ∼107 s and ∼378 s. The effect of Pd doping on the optical, structural properties of SnO2 and its ethanol vapor sensing behavior was studied and discussed.