Abstract Hydrogen (H 2 ) gas is a green fuel, but its leakage during storage and transportation can lead to disasters due to its explosive nature. Here, a sensitive and selective H 2 gas sensor is developed that can detect H 2 in H 2 /CO and H 2 /NO 2 gas mixtures. First, ZnO nanowires (NWs) are grown using vapor–liquid–solid growth. This is followed by atomic layer deposition‐mediated growth of Pd nanoparticles (NPs) on the ZnO NWs and uniform deposition of a thin NiO shell layer (12 nm in thickness) over the Pd‐decorated ZnO NWs. Characterization of the synthesized samples by different methods confirms the desired chemical composition, morphology, and phases. H 2 gas sensing studies reveals the highly sensitive and selective response of the optimized gas sensor to H 2 at 200 °C. In the presence of H 2 /CO and H 2 /NO 2 gas mixtures, the NiO‐shelled Pd‐decorated ZnO NW sensor displays good selectivity for H 2 , but not the Pd‐decorated ZnO NW gas one. The NiO‐shelled Pd‐decorated ZnO NW gas sensor efficiently detected H 2 also in the presence of 40% relative humidity and displays good stability even after 1 month. The present results can open the doors to the fabrication of highly selective H 2 gas sensors using the described rationale design.