Tin dioxide nanowires were formed by using thermal evaporation and functionalized by Pd nanodots for investigating the effect of nano-additives on NO2 sensing properties. SnO2 nanowires are uniformly functionalized with Pd nanodots by plain micro-drop process of PdCl2. The NO2 sensing characteristics of the Pd-functionalized SnO2 nanowires are compared with those of bare SnO2 nanowires. The results indicate that the concentration of catalytic Pd nanodots plays an important role in the enhancement of NO2 sensing properties. The low concentration of Pd nanodots greatly enhances the sensor response and response time in SnO2 nanowire-based gas sensors. However, extensive addition of Pd into the sensing layer resulted in the degradation of sensing characteristics. Moreover, the SnO2 nanowires functionalized with excessively high concentration of Pd nanodots shows an anomalous behavior in its output.