In this study, polypyrrole (PPy) and polypyrrole/molybdenum oxide composite (PPy/MoO3) were synthesized by the chemical oxidative method in an aqueous medium, using anhydrous ferric chloride (FeCl3) as an oxidant. The successful preparation of materials was confirmed by Fourier transform infrared spectroscopy (FT-IR), X-ray diffraction (XRD), scanning electron microscopy (SEM) and transmittance electron microscopy (TEM). PPy and PPy/MoO3 were converted into pellets which were used as the sensor. A four-in-line probe device was used for studying DC electrical conductivity–based ammonia vapour–sensing properties at three different ammonia concentrations, that is, 1 M, 0.5 M and 0.1 M. The PPy/MoO3 sensor showed much-improved sensing performance than the PPy sensor in terms of % sensing response and reversibility. PPy/MoO3 sensor showed excellent selectivity for ammonia vapours against various VOCs. The % sensing response of PPy/MoO3 sensor towards ammonia was found to be 2.19, 2.50, 3.16, 3.87, 4.1, 5.15, 6.19, 6.55 and 7.77 times greater than ethanol, methanol, acetone, acetaldehyde, formaldehyde, toluene, benzene, chloroform and n-hexane, respectively. In the end, a sensing mechanism was also proposed, which is based on rapid adsorption–desorption of ammonia molecules on the PPy/MoO3 sensor’s surface.