Noble metal nanoparticles (NPs) decorated on the surface of semiconducting metal oxides to enhance the gas-sensitive properties of sensing materials have attracted considerable interest from numerous researchers worldwide. Here, we introduce an effective method to decorate Pd NPs on the surface of porous ZnO nanorods to improve NO2 gas-sensing performance. Porous ZnO nanorods were synthesized using a simple hydrothermal method without surfactant. Surface decoration of porous ZnO nanorods with Pd NPs was performed through in situ reduction of PdCl2 using Pluronic as the reducing agent. The gas-sensing properties of porous Pd-ZnO nanorods were evaluated toward NO2 toxic gas in a concentration range of 0.1–2 ppm at various operating temperatures of 25 °C–250 °C. Pd NPs decorated on the surface of porous ZnO nanorods not only improve the sensor response (3-folds) and reproducibility but also reduce the optimal operating temperature. The improvement in gas-sensing activity is attributed to the modulation of the depletion layer via oxygen adsorption and the formation of the Schottky potential barrier between Pd and ZnO through chemical and electronic mechanisms.