Pd/SnO composite films were obtained by wet chemical route using SnCl:2HO as tin containing precursor and PdCl as palladium containing precursor. The bilayer structures were subjected to rapid thermal annealing for the incorporation of Pd in SnO matrix. Pd/Sn was varied between 6 to 20% for optimizing the Pd concentration for improved sensitivity. Liquid Petroleum Gas (LPG) sensing properties were also investigated. The films thus obtained were subjected optical, microstructural, FTIR and Raman studies both before and after LPG exposure.