A nano-sized multi-walled carbon nanotube/titanium dioxide (MWCNT/TiO2) composite gas sensing material was synthesized using the chemical vapor deposition method and extensively characterized through advanced techniques. Scanning electron microscopy (SEM) revealed a microporous surface featuring a cross-linked nanotube structure in the thin film. The bandgap, determined from absorption spectra, was calculated to be 3.89 eV. Electrical resistance variations in response to liquefied petroleum gas (LPG) concentrations (0.5–2 vol%) were systematically recorded over time, with the maximum %sensor response of 423.2 at 2 vol%, indicating high sensitivity. The sensor response towards humidity was found as 1.05 MΩ/%RH at room temperature. The limit of detection (LOD) for LPG by using MWCNT/TiO2 at room temperature was found to be 0.063 vol%. Ab initio density functional theory (DFT) calculations provided insights into the adsorption mechanisms of LPG and H2O on the CNT/TiO2 surface, assessing changes in ionization potential, HOMO-LUMO gap, and electronegativity upon interaction with hydroxyl and CnH2n+2 groups. This comprehensive approach highlights the development of a robust, cost-effective, and technologically advanced sensor for LPG and humidity detection.