Combustion aerosol processes can uniquely embed noble metals into semiconducting particles. Here, monocrystalline SnO₂ particles embedded with Pd and/or PdO_x were made by flame spray pyrolysis (FSP) of appropriate precursors through microexplosions by droplet-to-particle conversion as the crystal size was proportional to the cube root of precursor solution concentration, C. These particles were air-annealed and leached with nitric acid for removal of metallic Pd from their surface. The SnO₂ crystal size varied from 11 to 24 nm and was in close agreement with the primary particle size determined by nitrogen adsorption. The embedded fraction of Pd ranged from about 30 to 80% of the nominal Pd-content. This was achieved by judiciously varying the C, Pd content and the ratio of precursor solution to dispersion oxygen flowrates during FSP. The response of sensors made by doctor blading films of such particles to 1 ppm of acetone and CO was evaluated at 350 °C and 50% relative humidity. Embedding Pd/PdO_x into SnO₂ significantly increased the sensor response: 2-6 times over that of pure or conventionally-made Pd-containing SnO₂ sensors at low nominal Pd-contents (0.2 mol%). For higher ones (i.e. 1 mol% Pd), the sensor response was enhanced by up to two orders of magnitude. This is attributed to Pd atoms in the SnO₂ lattice near the particle surface and/or Pd/PdO_x clusters acting as nanoelectrodes into SnO₂ films and altering their transducing properties as shown by high resolution electron microscopy, XPS and baseline resistance measurements of pure and Pd-embedded SnO₂ sensing films.