Continuous monitoring of gases at low concentrations is necessary for keeping track of emanations from coal mines as gas emissions prove to be a detrimental factor for people working in such environments. Therefore, there is a requirement to develop a selective CO sensor which can go down to the ppm level for initiating the triggering of an alarm system. With this objective, a selective CO (up to 20 ppm) sensor has been investigated with the exploration of different material combinations (Pd−ZnO) and optothermal activation techniques. The selectivity of target gases such as CO, CH 4 , and NH 3 has been a controversial topic among researchers as the sensing mechanism is almost similar in all the three cases. The major challenge to be addressed while designing a micro-electromechanical system-based gas sensor is the problem of reliability, cross-sensitivity, and selectivity, which stagnates the overall performance of the system. The optothermally activated sensor platform with suitable nanomaterials play a significant role in curtailing the above-mentioned issues. The present work implements Pd-doped nanocrystalline ZnO with defect-oriented active sites which are found to be highly efficacious in providing a sensor with a strong adsorption reaction and propelling the surface conversion kinetics. The sensor is optimized for selective CO sensing due to the interplay between the defect states on Pd−ZnO with optical and thermal activation. As a direct consequence, a reliable, robust, cost-effective, and CO-selective packaged gas sensor at approximately 3.5 W is realized. Simulation, optimization of the sensing nanomaterial, fabrication of a screen-printed integrated heater and sensing electrodes, thermo-optical excitation, detailed packaging, and characterization are discussed in this study. Thus, the present methodology to fabricate the CO-selective sensor is suitable for various applications where a robust, reliable, selective sensing performance is required. Detailed material characterization has been performed to analyze the sensing behavior of the grown nanomaterials (Pd−ZnO).