Formaldehyde is a known human carcinogen widely present in various industrial processes. Dissolved formaldehyde in water poses a significant threat to human health, not solely gases. Here, a novel label-free detection scheme of formaldehyde in aqueous environment via Ti-doped MoS2 as the functionalized layer on a localized surface plasmon resonance (LSPR) sensor is reported. It has been found that the strong adsorption of formaldehyde on Ti-doped MoS2 attached on gold nanoislands induces a strong local refractive index change and enables sensitive detection. Besides, the characterization and LSPR experimental results also highlight the contribution of the nanoislands morphology to facilitate improved surface attachment of Ti-doped MoS2, and in turn improves the sensing performance. Along with experimental work, density functional theory (DFT) calculation has shown the strong formaldehyde adsorption on Ti-doped MoS2 with water molecules included, therefore confirming its feasibility and effectiveness for sensing. The sensor has successfully achieved an excellent detection limit of 0.104 ppb with its selectivity studied and confirmed using DFT calculations and experiment. The practical value of this research lies in its potential development of this light-based sensor for water quality monitoring with the major advantages of facile synthesis, fast detection, and label-free sensing offered by LSPR.