La doped indium oxide (In2O3:La) thin films were deposited on glass substrate by nebulizer spray pyrolysis by different La doping concentrations. The crystalline structure, morphology, optical and gas sensing properties of thin films were investigated. XRD diffractograms present cubic crystal structure of In2O3 films, with decreased crystallite size with the incorporation of La dopants. SEM analysis of thin film samples exhibits approximately cube-shaped morphology without any cracks of microstructures. The optical band gap magnitude shows shift in energy values in the range of 3.12–3.29 eV with increasing La concentrations. For all films, the photoluminescence spectra showed violet-blue emission peaks at around 420–480 nm. All of the developed films were tested for ammonia (NH3) gas detection at ambient temperature. In2O3:La 5% sensor had the highest gas response value of 1720%, a quicker response and recovery times of 48/12 s, respectively, suggesting the sample could be better suited for the application of NH3 gas sensor.