Ag doped tin oxide thin films were prepared by evaporating the mixture of SnO2, and Ag powder. The granular film with a high Ag incorporation (16 at.%) was found to possess excellent sensitivity, selectivity and rapid response to the presence of H2S gas at low temperature. X-ray diffraction, scanning electron microscopy and energy-dispersive X-ray analysis were carried out to investigate the sensing mechanism. The film was composed of tin oxide with oxygen deficiency (Sn3O4) and Ag2O crystals. Direct evidence of H2S adsorption on the Ag2O grain surface was observed.