In a recent while, heterostructured materials have shown great potential for highly sensitive and selective gas sensing applications. Herein, CeO2–ZrO2 nanocomposites were fabricated in varying compositions in lower CeO2 region (2.5–10%) via hydrothermal methodology. UV-visible DRS studies ascertained the band gap tailoring of the heterojunctions ranging from 3.33-4.07eV as compared to their pure counter parts CeO2 (3.03eV) and ZrO2 (4.96eV). The surface area studies revealed the high specific surface areas of 90, 81.2, 72.7 and 61 m2/g for the 2.5, 5, 7.5 and 10% CeO2–ZrO2 hetero-nanocomposites along with 53.2 and 108 m2/g for pure CeO2 and ZrO2 nanostructures, respectively. CeO2–ZrO2 nanocomposites revealed ameliorated sensing response towards the NO2 as compared to the bare ZrO2. The maximum sensitivity of 1572 was shown by the 5% CeO2–ZrO2 nanocomposite at optimum operating thermal conditions of 250oC that was relatively higher as compared to pristine ZrO2 nanospheres. Augmented sensing efficiency is attributed to the tweaked surface area of the nanocomposites, alleviated band energy, existence of oxygen vacant sites over CeO2 surface and ameliorated interaction due to the formation of CeO2–ZrO2 heterojunctions. The improved sensing performance of CeO2–ZrO2 sensors has been extensively discussed alongside mechanistic sketch.