In this study, we reported the synthesis of pure ZnO and Mg-doped ZnO (Mg-ZnO) nanoparticles by simple co-precipitation method and studied the ethanol sensing activity of the synthesized nanostructures. XRD analysis illustrates that the synthesized ZnO and Mg-doped ZnO nanoparticles (NPs) possess hexagonal wurtzite structure and the average crystallite size is calculated to be 29 nm and 33 nm, respectively. The FT-IR spectra of pure and Mg-doped ZnO NPs confirm that the presence of bands appeared near 400 cm-1 for Zn-O and the bands at 622 cm-1 can be attributed to Mg-O stretching modes. The band gap energy estimated from the absorption spectra for ZnO and Mg-ZnO NPs, respectively, at 3.26 eV and 3.32 eV, displays the considerable optical property. Further, we observed that the UV-Vis spectroscopic data exhibits high absorbance in the UV range for the prepared samples. The SEM images clearly display the needle-like morphology of the synthesized samples. Dynamic light scattering analysis shows average particle size of 110 nm. The ethanol sensing measurements were carried out with 100 ppm concentration, and the linear responses from ZnO and Mg-ZnO NPs-based sensors are detected in the working temperature of 350°C. The obtained results demonstrated that the synthesized Mg-ZnO nanostructures have improved conductivity with larger active surface area for the most promising application in the ethanol sensing activity.