In this work, Zn2SnO4 microstructures functionalized with PdO nanoparticles were successfully synthesized combination a facile one-step hydrothermal method and subsequent wet impregnation treatment. X-ray diffraction (XRD), field-emission scanning electron microscopy (FESEM), transmission electron microscopy (TEM), and selected-area electron diffraction (SAED) were employed to obtain the crystalline and morphological characterization of the as-prepared products. The results demonstrated that the morphology of the final Zn2SnO4 samples have uniform octahedral structure. Interestingly, the surface of Zn2SnO4 octahedrons was assembled by nanosheets with the assistant of CTAB. In addition, gas-sensing properties of the as-prepared Zn2SnO4 octahedrons before and after functionalization with PdO nanoparticles were systematically investigated. Compared with pure Zn2SnO4, the sensor based on 2 wt% PdO-loaded Zn2SnO4 octahedrons exhibited obviously enhanced gas sensing properties toward ethanol. The response value was 82.3 toward 100 ppm ethanol, which was almost five times higher than that of pure Zn2SnO4. The novel structure of Zn2SnO4 octahedrons and the catalytic effect of PdO nanoparticles were believed to be the main reason of the enhancement of gas sensing characteristics.