The palladium nanoparticle (Pd NP)-decorated LaAlO3/SrTiO3 (LAO/STO) heterostructure is for the first time used as a hydrogen-gas sensor with very high sensitivity and workability at room temperature. The outstanding gas-sensing properties are due to the Pd NPs' catalytic effect to different gases, resulting in charge coupling between the gas molecules and the two-dimensional electron gas (2DEG) through the Pd NPs by either a direct charge exchange or a change of the electron affinity. These results provide insight into the emerging properties at LAO/STO interfaces.