We report on the correlation between defect-related emissions, the magnetization and sensing of TiO2 nanoparticles (NPs) prepared by milling method. Surface morphology analyses showed that the size of the TiO2 NPs decreases with milling time. Raman and XRD studies demonstrated that the structural properties of the TiO2 transform to orthorhombic structure upon milling. Magnetization improved with an increase of a defect-related band originating from oxygen vacancies (VO), which can be ascribed to a decrease in the size of the NPs due to the milling time. Moreover, the longer-milled TiO2 exhibited enhanced gas-sensing properties to humidity in terms of sensor response, with about 12 s response time at room temperature. A combination of photoluminescence, X-ray photoelectron spectroscopy, vibrating sample magnetometer and sensing analyses demonstrated that a direct relation exists between the magnetization, sensing and the relative occupancy of the VO present on the surface of TiO2 NPs.