A composite powder of tin oxide (SnO 2 ) and silver (Ag) clusters was prepared by a simple and cost effective method of reducing their aqueous mixture with sodium borohydride (NaBH 4 ). Gas sensors based on the composite were made by powder pressing procedure and characterized by X-ray diffraction (XRD) and scanning electron microscopy (SEM). The electrical conductivity and gas sensing behavior of the sensors for methane (CH 4 ) gas were studied as a function of Ag concentration (0.3, 0.5, 0.8 and 1.5wt%). The Ag additive is found to improve sensor response and widen its working temperature range with notable sensor response. The best sensor response was achieved by the sensor with 0.5wt% Ag. The enhanced response was proved to be due to both electrical and chemical mechanisms.