Ultrafine SnO2 nanopowder was prepared by a free arc method and an arc plasma method, respectively. Then the phases, morphology and particle size were characterized by X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM) and energy dispersive spectrometry (EDS). The results show that the powder prepared by the arc plasma method has uniform particles with smaller size and fewer impurities, which are mostly spherical; while the powder prepared by the free arc method has bigger particle size and much C impurities. Nucleation and growth mechanism of the powder was analyzed and it is found that the temperature, temperature gradient and saturation are significant influencing factors. Arc plasma method has easily higher temperature and temperature gradient, so it is favorable for nucleation and growth to obtain high nucleation rate