Layer-by-layer nanocomposites consisting of Co3O4 and reduced graphene (rGO) nanosheets were synthesized by a simple hydrothermal process with the annealing step. We investigated their gas sensing performances towards several volatile organic compounds (VOCs). Composites showed high response, excellent circularity and long-term stability as ethanol sensors operating at 200 degrees C. Nanocomposite with 15 wt% of rGO exhibited the best sensitivity. The gas sensing mechanism of the composite to ethanol is discussed in detail.