As a widely used support, TiO2 has often been combined with Pd to form highly sensitive gas-chromic materials. Herein, we prepared a series of Pd/TiO2 catalysts with different Pd content (from 0.1 to 5 wt.%) by the impregnation method for their utilization in fast room-temperature CO detection. The detection was simply based on visible color change when the Pd/TiO2 was exposed to CO. The sample with 1 wt.% Pd/TiO2 presented an excellent CO gasochromic character, associated with a maximum chromatic aberration value of 90 before and after CO exposure. Systematic catalyst characterizations of XPS, FT-IR, CO-TPD, and N2 adsorption–desorption and density functional theory calculations for the CO adsorption and charge transfer over the Pd and PdO surfaces were further carried out. It was found that the interaction between CO and the Pd surface was strong, associated with a large adsorption energy of −1.99 eV and charge transfer of 0.196 e. The color change was caused by a reduction in Pd2+ to metallic Pd0 over the Pd/TiO2 surface after CO exposure.