With rapid advancements in technology in the electronics sector, demand for the miniaturization of devices while retaining their functionality is on the rise. Metal oxidebased thermal sensors are desired, owing to their enhanced sensing capabilities and low cost of operation. Highly sensitive metal oxide sensors can enable stable, accurate, and miniaturized thermal sensors tailored to different operational ranges. However, the influence of humidity and how it affects the sensitivity of the material by interacting with the material surface has not been extensively studied. In this work, we report a vanadium dioxide (VO 2 )-based thin film thermal sensor studied under the influence of varying humidity conditions. The effect of different humidity levels on the overall thermal sensing behavior and the insulator-to-metal transition (IMT) phenomenon was investigated. Further, density functional theory (DFT) studies were conducted to understand the thermal sensing mechanism under changing humidity conditions. The developed sensor exhibited a good response over a broad temperature range of −100 to 100 °C, with a TCR of −0.00243%, high sensitivity, and cyclic repeatability. Wireless measurement capabilities were also demonstrated. Such sensors could potentially be used in environmental sensing applications.