Tin oxide nanocrystals (5–10 nm) doped with silica (0–15 wt %) were made by flame-spray-pyrolysis direct deposition onto the sensing electrodes and in situ stabilization by rapid flame annealing. Although increased SiO2-doping reduced the SnO2 crystal and grain size, its sensing performance to ethanol vapor (0.1–50 ppm) exhibited an optimum with respect to SiO2 content. The thermal stability and morphology of SiO2-doped SnO2 nanoparticles were evaluated by sintering at 200–900 °C for 4–24 h in air. At low SiO2 content, sintering of SnO2 was prevented only partially resulting in small sinter necks (bottlenecks) between SnO2 primary particles (smaller than twice the Debye length). This morphology drastically enhanced the sensitivity toward the analyte by maintaining a thermally stable high surface area and fully depleted connections at the primary particle necks. This enhancement is attributed mostly to the decreasing neck size of the SnO2SiO2 heterojunctions rather than the decreasing SnO2 crystallite and grain sizes with increasing SiO2 doping. At high SiO2 contents, SnO2 sintering was inhibited as its grains were separated effectively by dielectric SiO2; this resulted in isolated SnO2 nanocrystals with drastically reduced sensitivity, thereby effectively being insulators.