Magnesium doped tin oxide nanoparticles were synthesized by chemical co-precipitation method. The structural, functional, morphological and optical properties were investigated by X-ray diffraction, Scanning Electron Microscope (SEM), UV-Vis spectroscopy, Fourier Transform Infrared Spectroscopy (FT-IR) and Photoluminescence (PL) techniques. The result confirms that all samples are in pure rutile tetragonal phase. The tetragonal structure of tin oxide remains constant in presence of Mg doping but the grain size decreases from 16nm to 10nm for 1wt % and 3 wt%, respectively. The effective strain values of the samples increases with increasing of Mg doping. The lattice constant, a/c ratio and cell volume were calculated from XRD data and the results are reported. FT-IR results show the presence of oxide groups in SnO2.