This study reports the modifications in CO sensing of SnOx nanoparticle layers by utilizing monodispersed Pd nanoparticles. The distinct advantage of monosized particles and contaminant-free samples with open porosity in addition to size effects resulted in improved CO sensing with decrease in Pd nanoparticle size to 5 nm, decreasing the lowest detection levels of CO using SnOx -based sensor technology down to 10 ppb (parts per billion) in dry synthetic air. The homogeneously mixed nanoparticle layers also exhibit discrimination capability between CO and ethanol in dry air as a manifestation of the dual conductance response. Detailed x-ray photoelectron spectroscopy studies clearly reveal "Mars-van Krevelen" as the key mechanism responsible for the observed sensing in mixed nanoparticle layers. The interfacial/surface PdO formed upon pretreatment in air is continuously "consumed" and "reformed" upon exposure, respectively, to CO and synthetic air. In contrast to the case of ethanol exposure with n -type response, the Pd aided reduction of tin oxide surface in CO ambient leads to p -type response. The sensors of the present study have a wide range of promising applications from air quality control to food and fuel industries.