Carbon and BN nanotubes have previously demonstrated extreme sensitivity to several molecules, but they cannot be used to detect highly toxic molecules of CO. In this work, we examine the possibility of a BC3 nanotube (BC3NT) as a potential gas sensor for CO detection by using density functional theory calculations. It is found that CO molecule can be absorbed on B and C atoms of BC3NT wall with adsorption energies in the range of −1.0 to −25.9 kcal/mol and it can donate finite charge to the tube. By comparing the HOMO/LUMO energy gaps of the bare and CO adsorbed nanotubes, we deduce that molecular CO can induce significant change in the electrical conductivity of the tube. The conductivity change can generate an electrical signal, which might be useful for CO detection.