We report the effects of a combination of Pd-decoration and Bi2O3-ZnO core-shell formation on the response of the Bi2O3 nanorod gas sensor to benzene. Pd-decorated Bi2O3–ZnO core–shell nanorods were synthesized by a four-step process including thermal evaporation of Bi powders in an oxygen atmosphere, atomic layer deposition of ZnO, and Pd decoration, followed by high-temperature annealing. The formation of Pd-decorated Bi2O3–ZnO core–shell nanorods was confirmed by X-ray diffraction, scanning electron microscopy, transmission electron microscopy, and energy-dispersive spectrometric elemental mapping. The Pd-decorated Bi2O3–ZnO core–shell nanorod sensor showed far stronger response to benzene improved compared to those of the Bi2O3–ZnO core–shell nanorod and Pd-decorated ZnO nanorod sensors. The Pd-decorated Bi2O3–ZnO core–shell nanorod sensor exhibited a response (Ra/Rg) of 28.0 to 200ppm of benzene at 300°C, whereas those of the Bi2O3–ZnO core–shell nanorod, and Pd-decorated ZnO nanorod sensors were 9.1 and 8.3, respectively. The extraordinarily strong response of the Pd-decorated Bi2O3–ZnO core–shell nanorod sensor compared to other sensors might be attributed to the intensified potential barrier modulation at the Bi2O3–ZnO interface due to the Pd-induced enhanced generation of electrons. The Pd-decorated Bi2O3–ZnO core–shell nanorod sensor also showed very good selectivity toward benzene against other reducing gases, such as ethanol, toluene, carbon monoxide, and acetone.