The accurate monitoring and detection of acetone vapor are essential for environmental and human safety. Consequently, fern-like Fe2O3 with hierarchical vein-like structures is synthesized via a concise hydrothermal method. Compared with pure fern-like Fe2O3, fern-like Pd/PdO-Fe2O3 shows the best acetone-sensing characteristics, in terms of lower operating temperature (180 °C), better selectivity and excellent long-term stability. More importantly, the response value of the Pd/PdO-Fe2O3 sensor to 100 ppm acetone reaches as high as 73, which is 55% higher than that of pristine fern-like Fe2O3. This enhanced sensing performance can be ascribed to the synergistic effect between Pd/PdO and fern-like Fe2O3. On the one hand, Pd/PdO nanoparticles show favorable catalytic activity toward ionized oxygen molecules; meanwhile, the formation of the heterojunction between PdO and fern-like Fe2O3 plays an important role. On the other hand, the hierarchical nature of fern-like Fe2O3 promotes efficient gas diffusion throughout the structure. Based on its advantages, fern-like Pd/PdO-Fe2O3 becomes a satisfactory candidate for acetone gas sensors.