Pd and Fe2O3 nanoparticles (NPs)-embedded porous NiO nanofibers (NFs) with high specific surface area were prepared using a facile electrospinning method. Adjusting the amount of Fe2O3 NPs in the precursor solution of electrospinning regulates the morphological evolution and crystallization of oxide heterostructures at elevated temperatures and significantly contribute to the enhanced gas sensing performance for hydrogen (H2) gas testing. Synthesized composites present the highest response of 199.24 at the optimum operating temperature of 250 °C toward 1000 ppm H2 gas, which is 65 times higher than that of only Pd-decorated NiO NFs. The response/recovery times of the sensors decreased significantly from 39/323 s for the pure sample to 11/105 s, along with good selectivity and long-term stability toward H2. The excellent gas sensing properties of the sensors is mainly attributed to the flourishing porous one-dimensional (1D) microstructure containing closely connected p-n heterojunctions of NiO and Fe2O3, which provide large specific surface areas with many active sites to promote the reaction between H2 molecules and O ion on the surface and the catalytic effect of Pd. The results demonstrate the potential of the method to fabricate gas sensors for H2 detection at ppm levels at 250 ℃ environment.