Pure ZnO and Pd/ZnO microstructures were prepared by hydrothermal method. The crystalline structures, morphology, and composition of synthesized hexagon hammer Pd/ZnO microstructures were analyzed by X-ray diffraction (XRD), scanning electron microscope (SEM), and energy dispersive X-ray spectroscopy (EDS). They were then studied for gas detection in order to achieve the optimal concentration of Pd in ZnO. Our results show that overall the Pd/ZnO microstructures have a better performance for ethanol detection comparing to the one without Pd, including a better sensitivity, a decreased operating temperature, and a shortened response/recovery time. At the optimal Pd concentration of 0.25 wt%, we observed a sensitivity enhancement of 3.5 times larger than that of ZnO without doping and a response and recovery time of 10 and 7 s, respectively. Moreover, the Pd/ZnO sensors could show a high selectivity and an excellent chemical stability, thereby providing a way to improve the gas sensing performances.