Here, we report the synthesis of Fe-doped ZnO/reduced graphene oxide (rGO) nanocomposites for gas sensing applications via a one-pot hydrothermal process. A wide range of characterization techniques were used to confirm the successful fabrication of the nanocomposite material and to determine the surface area, the structural and morphological properties, the chemical composition, and the purity of the samples, such as Brunauer-Emmett-Teller, X-ray diffraction, Fourier transform infrared, Raman spectroscopy, scanning electron microscopy, transmission electron microscopy, UV-vis spectroscopy, and X-ray photoelectron spectroscopy techniques. The gas sensing performance to formaldehyde was studied thoroughly in a temperature-controlled test chamber. Compared to that of the bare ZnO and ZnO/rGO nanocomposites, the as-prepared 5 atom % Fe-doped ZnO/rGO nanocomposites presented significantly enhanced gas sensing performance to formaldehyde at relatively low temperatures. Whereas most formaldehyde sensors operate at 150 °C and can detect as low as 100 ppm concentrations, the presented sensor can detect 5 ppm formaldehyde at 120 °C. Its fast response-recovery time, high stability, and high selectivity make it an ideal sensor; however, it can exhibit degenerative gas sensing performance at elevated relative humidity. The enhanced gas sensing mechanism was explained as the synergic effect of rGO and Fe doping. The results demonstrate that Fe doping and decorating the nanocomposite with rGO are promising approaches for achieving a superior gas sensing performance for the development of ZnO gas sensors for the detection of formaldehyde.