The present work reports a facile, cost-effective, template-free hydrothermal preparative strategy for the synthesis of iron oxides, i.e. alpha-Fe2O3 (haematite) and Fe3O4 (magnetite) nanoparticles. The polyaniline (PANI) and their iron oxide hybrid nanocomposites (PANI/IO) were prepared by in situ chemical oxidative polymerization method. These PANI/IO nanocomposites were characterized by UV-DRS, FTIR, XRD, SEM techniques and tested for their ammonia sensing properties. The newly synthesized PANI/IO nanocomposites were highly sensitive towards a wide range of concentration of hazardous ammonia (1-400 ppm) at room temperature and possess excellent shelf life. The experimental results revealed that PANI/IO sensor shows ultra-fast response (13-26 s) and recovery (14-25 s) time for 1-100 ppm concentration of ammonia, and thereafter, for higher concentrations (up to 400 ppm) it practically remains constant. The responses of PANI/IO sensors were reproducible over entire range of ammonia concentrations for 10 cycles. The cost-effectiveness, operation simplicity, facile method of synthesis, ultra-fast response and recovery with excellent reproducibility make PANI/IO ammonia sensor commercially attractive than the ammonia sensors reported in the literature.