Ag-doped NiO thin films were fabricated by dip coating and subsequently annealed at 373, 473, 573, and 673 K to elucidate the influence of annealing temperature on their structural, morphological, optical, and NO2-sensing characteristics. X-ray diffraction confirmed the formation of polycrystalline Ag/NiO films, with progressively improved crystallinity and larger crystallite size at elevated annealing temperatures. Atomic force microscopy revealed a homogeneous surface morphology with grain growth, with the average grain diameter increasing from 26.40 to 34.2 nm. Optical analysis showed high visible-region transmittance (65–70%) and a gradual reduction in the optical band gap from 2.75 to 2.07 eV with increasing annealing temperature. Gas-sensing performance was evaluated at 6 ppm NO₂ at room temperature and at 323, 373, and 423 K. The response was strongly dependent on both annealing and operating temperatures, with optimum performance achieved for the film annealed at 573 K and operated at 373 K, exhibiting a maximum sensitivity of 57%, a response time of 10.2 s, and a recovery time of 10 s. The enhanced sensing behavior is attributed to the combined effects of improved crystallinity, favorable surface morphology, and the p-type semiconducting nature of NiO, in which adsorption of oxidizing NO2 increases hole concentration and decreases electrical resistance. These findings demonstrate that Ag-doped NiO thin films are promising materials for NO₂ sensing applications. Since the present study mainly focuses on elucidating the effect of annealing temperature on the structural, optical, and sensing behavior of the films, further work will be directed toward evaluating the detection limit, long-term stability, and selectivity under practical operating conditions.