The aim of the present study was the development of Nb-doped ITO thin films for carbon monoxide (CO) sensing applications. The detection of CO is imperious because of its high toxicity, with long-term exposure having a negative impact on human health. Using a feasible sol-gel method, the doped ITO thin films were prepared at room temperature and deposited onto various substrates (Si, SiO2/glass, and glass). The structural, morphological, and optical characterization was performed by the following techniques: X-ray diffractometry (XRD), atomic force microscopy (AFM), scanning electron microscopy (SEM), transmission electron microscopy (TEM), and UV/Vis/NIR spectroscopic ellipsometry (SE). The analysis revealed a crystalline structure and a low surface roughness of the doped ITO-based thin films. XTEM analysis (cross-sectional transmission electron microscopy) showed that the film has crystallites of the order of 5-10 nm and relatively large pores (around 3-5 nm in diameter). A transmittance value of 80% in the visible region and an optical band-gap energy of around 3.7 eV were found for dip-coated ITO/Nb films on SiO2/glass and glass supports. The EDX measurements proved the presence of Nb in the ITO film in a molar ratio of 3.7%, close to the intended one (4%). Gas testing measurements were carried out on the ITO undoped and doped thin films deposited on glass substrate. The presence of Nb in the ITO matrix increases the electrical signal and the sensitivity to CO detection, leading to the highest response for 2000 ppm CO concentration at working temperature of 300 °C.