Sol-gel derived Mg doped tin oxide (Sn1-xMgxO2) nanocrystals were synthesized with x ranging between 0.5 and 7 at. %. Characteristic single phase tetragonal structure of pure and doped samples was obtained and doping saturation was inferred by X-ray diffraction analysis. Structural, morphological and phase informations were obtained by high resolution transmission electron microscope, field emission scanning electron microscope and X-ray photoelectron spectroscopy respectively whereas bonding information was obtained from Fourier transformed infrared spectroscopy. Measurement of different electrical parameters with frequency (200 Hz-10(5) Hz) has been carried out at room temperature. Ultrahigh dielectric constant and metallic AC conductivity were observed for undoped tin oxide and the profiles reflected highly sensitive changes in the atomic and interfacial polarizability generated by doping concentrations. Relaxation spectra of tangent loss of any sample did not show any loss peak within the frequency range. Both the grain and grain boundary contributions are observed to increase as the doping concentration increased. Results of first principle calculation based on density functional theory indicated effective Fermi level (E-F) suppression due to Mg doping which is responsible for the experimentally observed conductivity variation. AC conductivity was found to depend strongly on the doping concentration and the defect chemistry of the compound. Mg doped SnO2 may find applications as a low loss dielectric and high density energy storage material. (C) 2011 Elsevier B.V. All rights reserved.