Oxygen vacancies (O) as the active sites have significant influences on the gas sensing performance of metal oxides, and self-doping of Ce in CeO might promote the formation of oxygen vacancies. In this work, hydrothermal process is adopted to fabricate the composites of graphene and CeO nanoparticles, and the influences of oxygen vacancies as well as Ce ions on the sensing response to NO are studied. It is found that the sensitivity of the composites to NO increases gradually, as the proportion of Ce relative to all of the cerium ions is increased from 14.6% to 50.7% but decreases after that value. First-principles calculations illustrate that CeO becomes metallic at the Ce proportion of <50.7%, the chemical potential of electrons on surface decreases, and the Fermi level shifts upward due to the existence of low-electronegativity Ce ions, resulting in reduced Schottky barrier height (SBH) at the CeO/graphene interface, enhanced interfacial charge transfer, and high gas sensing performance. However, deep energy level will be induced at the Ce proportion of >50.7%, and the Fermi level is pinned at the interface. As a result, the density of free electrons is reduced, leading to increased SBH and poor gas sensing response. It demonstrates that an appropriate concentration of oxygen vacancies in CeO is needed to enhance the gas sensing performance to NO.