Noble metal additives are widely used to improve the performance of metal oxide gas sensors, most prominently with palladium on tin oxide. Here, we photodeposit different quantities of Pd (0-3 mol%) onto nanostructured SnO₂ and determine their effect on sensing acetone, a critical tracer of lipolysis by breath analysis. We focus on understanding the effect of operating temperature on acetone sensing performance (sensitivity and response/recovery times) and its relationship to catalytic oxidation of acetone through a packed bed of such Pd-loaded SnO₂. The addition of Pd can either boost or deteriorate the sensing performance, depending on its loading and operating temperature. The sensor performance is optimal at Pd loadings of less than 0.2 mol% and operating temperatures of 200-262.5 °C, where acetone conversion is around 50%.