A novel differential readout circuit (DRC) for tin oxide gas sensors is proposed. The DRC consists of a differential readout unit (DRU), a voltage shifter (VS) and an instrumental amplifier. The DRU applies a constant current to drive the sensor and uses a unit-gain single stage amplifier (inverter) to generate the fully differential output, directly from the voltage drop across the sensor. By tuning the biasing current of the voltage shifter, the DRC can compensate for the sensor's baseline and its drift. The output of the DRC is simply proportional to the difference between the sensing signal and the baseline. Simulation results show that the DRC can sense and amplify 0-20MΩ sensor's resistance variation, which is often encountered in gas sensor applications. The output presents a linear dependence with the resistance variation of the sensor over the entire dynamic region. The proposed DRC provides increased signal to noise ratio over conventional single-ended voltage divider readout methods.