Combined with other metal oxide is an effective method to improve the sensing properties of SnO2. In the paper, the heterostructural nanocomposites of Fe2O3 and SnO2 were prepared successfully by a simple and low-cost hydrothermal method, and the nanostructure and morphology were analyzed through a battery of characterization such as X-ray diffraction (XRD), scanning electron microscopy (SEM), transmission electron microscopy (TEM), the Brunauer-Emmett-Teller (BET) approach and X-ray photoelectron spectroscopy (XPS). Characterization results exhibit that the diameter of SnO2/Fe2O3 heterostructural nanocomposites and the diameter and length of Fe2O3 nanorods are 10 nm and 200–300 nm, respectively. The BET surface area is calculated to be 93.5 m2/g, and the main pore diameter is about 13 nm. According to the gas sensing text, it is obvious that the optimum temperature of SnO2/Fe2O3 heterostructural nanocomposites is 320 °C. When injecting the concentration of 100 ppm ethanol, the response value of SnO2/Fe2O3 heterostructural nanocomposites is 23.512, which is higher than the pure SnO2 nanospheres. Therefore, the SnO2/Fe2O3 heterostructural nanocomposite will become a promising functional material in monitoring and detecting ethanol.