In the present work, rare earth (RE)-doped PbO thin films are characterised for their structural, morphological, electrical, optical and gas sensing properties. Thin films of PbO and Ce-, Nd- and Eu-doped PbO are deposited on a glass substrate using ultrasonic spray pyrolysis technique. We have considered 1, 5 and 10 mol% concentration of RE elements in PbO. X-ray diffraction patterns confirmed the formation of polycrystalline PbO and RE-doped PbO thin films with tetragonal structure. Scanning electron micrographs and optical absorption spectra of RE-doped PbO thin films revealed the decrease in average particle size and band gap with an increase in RE dopant concentration in PbO. The band gap of undoped PbO thin film is 2.58 eV. The concentration-dependentvariations in the band gap of RE:PbO thin film are observed. The band gap of RE:PbO varies from 1.75 to 3.05 eV. At room temperature, the RE:PbO systems are found to be highly sensitive towards a wide concentration range(333 to 3330 ppm) of CO$_2$ compared to the undoped PbO film. Ce- and Nd-doped PbO thin films show enhanced sensitivity towards CO$_2$ gas compared to Eu-doped PbO thin films. At room temperature, significant increase inthe gas sensor response of doped samples have been corroborated to their increased surface area, morphological changes and oxygen vacancies present.