The high concentration of ethanol vapors can be a biomarker for fatty liver diseases and severely damage the nervous system. Naphthalene diimide (NDI) has been regarded as n-type semiconductor. NDI possesses high electron affinity, thermal stability and electron mobility, which make NDI as a promising material for electronic devices. Therefore, a dipeptide (C = 6-aminocaproic acid, Y = L-tyrosine) functionalized naphthalene diimide based zinc oxide (NDICY-ZnO) nanohybrid has been synthesized <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">via</i> facile single-pot hydrothermal method. The NDICY-ZnO based sensor exhibits a response of 66.4% with response/recovery time of 450/500 sec, respectively upon the exposure of 500 ppm ethanol at 27 °C. It also shows remarkable selectivity to the ethanol vapors compare to other interfering gases and volatile organic compound for instance methanol, benzene, aniline, NO <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> , H <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> S, CO <sub xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">2</sub> , acetone and formaldehyde. Moreover, NDICY-ZnO nanohybrid sensor performance is also analyzed under varying relative humidity (RH) conditions which highlights the positive effect on ethanol sensing response. The responses at 46%, 75% and 97% RH are recorded as 66.4%, 75.4% and 83.6%, respectively. In addition, NDICY-ZnO fabricated device shows excellent stability, less air sensitivity and reusability for 90 days. These impressive findings facilitate the low-cost and highly selective detection of ethanol under ambient condition.