Natural gas has become one primary energy source. However, using natural gas imposes enormous challenges since natural gas leaks may cause catastrophic damage to the environment and human life. As the main component of natural gas, methane (CH4) is a type of greenhouse gas that exacerbates global warming and has a risk of explosion in air. Developing CH4 sensing technology is crucial to detect natural gas leaks. Despite tremendous efforts in exploring gas sensing by graphene and its derivatives, the low reactivity limited the application of graphene-based materials in CH4 detection. Here, density functional theory (DFT) calculations were carried out to study graphene and its derivatives’ CH4 adsorption energy, sensitivity, and selectivity. Graphene derivatives with hydroxyl groups around surface vacancies were found to be superior in CH4 sensing over other graphene derivatives. Our findings offer new design guidelines for developing CH4 sensors.