Pristine SnO2 nanoparticles (NPs) and its composite with reduced graphene oxide (SnO2 NPs/rGO) have been successfully synthesized using a facile hydrothermal method. Prepared samples are characterized by X-ray diffraction, high-resolution transmission electron microscopy, X-ray photoelectron spectroscopy, Brunauer–Emmett–Teller analysis, and Raman and photoluminescence spectroscopy. The results show that the average crystallite size of SnO2 NPs with tetragonal rutile structure decreased from about 14 to about 8 nm during the formation of SnO2 NPs/rGO nanocomposite. The resultant SnO2 NPs/rGO nanocomposite exhibits high surface area of 128.52 m2=g and large pore volume of 0.14 cm3=g with uniform pore size of 4.39 nm. The existence of electronic interactions caused by the formation of p–n heterojunctions between p-rGO and n-SnO2 NPs is confirmed by analysis results. SnO2 NPs/rGO nanocomposite sensing responses toward 600–1700 ppm of ethanol vapor at 130 C are about 14–33 times higher than those of pristine SnO2 NPs at 210 C. The nanocomposite sensor exhibits very low response time of below 3 s, good selectivity, and excellent long-term stability with the response decay of about 4% after 4 months. The improved sensing characteristics in SnO2 NPs/rGO nanocomposite can be attributed to the formation of p–n heterojunctions, small particles size, large specific surface area, and high porosity.