We discovered a promising room-temperature CO sensing capability of Pt or Pd nanoparticle-functionalized In2O3 flower-like nanobundles (NBs) composed of parallel nanoparticle-chains. The highly branched In2O3 flower-like NBs synthesized through the process of hydrolysis of InCl3 in NaBH4 aqueous solution and the subsequent heat treatment provided an extremely porous matrix required for high-performance gas sensors. The Pt and Pd nanoparticles uniformly deposited on the In2O3 NBs evidently play a key role in enhancing the sensitivity and response, and most importantly lowering the operating temperature to 25 °C for the detection of CO gas. The present innovative hybrid nanostructures offer a potential platform for room-temperature oxide-based gas nanosensors. Moreover, the resulting sensing behaviours lead to a better understanding of using and designing such nanosensors for a number of gas sensory applications.