DRIFTS, TGA and resistance measurements have been used to study the mechanism of water and hydrogen interaction accompanied by a resistance change (sensor signal) of blank and Pd doped SnO(2). It was found that a highly hydroxylated surface of blank SnO(2) reacts with gases through bridging hydroxyl groups, whereas the Pd doped materials interact with hydrogen and water through bridging oxygen. In the case of blank SnO(2) the sensor signal maximum towards H(2) in dry air (R(0)/R(g)) is observed at approximately 345 degrees C, and towards water, at approximately 180 degrees C, which results in high selectivity to hydrogen in the presence of water vapors (minor humidity effect). In contrast, on doping with Pd the response to hydrogen in dry air and to water occurred in the same temperature region (ca. 140 degrees C) leading to low selectivity with a high effect of humidity. An increase in water concentration in the gas phase changes the hydrogen interaction mechanism of Pd doped materials, while that of blank SnO(2) is unchanged. The interaction of hydrogen with the catalyst doped SnO(2) occurs predominantly through hydroxyl groups when the volumetric concentration of water in the gas phase is higher than that of H(2) by a factor of 1000.