We report on the fabrication of highly sensitive and selective hydrogen gas sensor based on Fe metal overlayered TiO2/ITO heterostructure synthesized by novel two-step deposition using spray pyrolysis and electron beam evaporation. XRD analysis revealed that the films were polycrystalline with the tetragonal crystal structure of anatase TiO2. Overlayer of Fe in TiO2 film resulted in the incorporation of Fe³+ ions into TiO2/ITO matrix which leads to a red shift in the optical response, as well as a reduction in the bandgap energy. The Raman spectroscopy also confirmed the formation of an anatase phase structure in both pure and nanocomposited Fe:TiO2/ITO films. FE-SEM images of TiO2/ITO and Fe/TiO2/ITO films revealed interconnected web like spherical structure favorable for sensing. AFM images revealed a high rms roughness of 6.49 nm for the hybrid film fabricated with the Fe deposition time of 10 min. The gas sensing behavior of Fe:TiO2/ITO nanocomposite exhibited a high sensitivity on exposure to H2 gas in the low concentration range from 100 ppm to 400 ppm. The hybrid sensor fabricated with the Fe deposition time of 10 min. revealed a fast response time of 40 S even at room temperature.