A laminated Pd-Cu alloy/C/Nafion multilayer was prepared to sense O2 atmosphere in a metal-air structure. As a matrix, palladium was doped with various amounts of copper to conduct a preliminary test with optimum response, and four compositions, Pd, Pd8Cu2, Pd6Cu4, and Pd5Cu5, were selected as the candidate electrodes. It was found that the Pd6Cu4/C electrode showed higher sensitivity for all the electrodes. According to the phase identification of X-ray diffraction and X-ray photoelectron spectroscopy tests, the high sensitivity was attributed to the doped Cu, which was merged into the Pd matrix to repel the Pd out of the matrix as a Pd-skin layer on the surface. In the Pd-Cu alloy, the Cu site served as a template reaction site to break the O-O bond and reduce the interaction force of adsorbated oxygen on the Pd site. During the oxygen reduction reaction, not only did the decomposition of O2 molecules occur on the electrode, but the electrode itself proceeded with a phase transformation to high valance of oxide, PdO3. The sensing potential for O2 sensing was determined by polarization curves in which the flat region resulting from a diffusion-control was adopted. Chronoamperometric measurements were employed to construct calibration curves for the selected electrodes. A successive response was measured to test the endurance, which showed appreciable sensitivity decay. We also tested the selectivity by introducing a series of disturbance gases, CO, SO2, and NO2, in which the Pd6Cu4 electrode prevailed over the other electrodes.