A room-temperature-operated CO2 gas sensor based on YCeO nanocomposite was effectively prepared by the simple hydrothermal technique to detect low traces of CO2 (50-250 ppm). The YCeO granular morphological features were observed using field-emission scanning electron microscopy, which confirmed successful fabrication of nanocomposite of Y2O3 and CeO2. X-ray diffraction of YCeO showed the Cubic structure of space group Fm3m having density 6.74 gmcm-3. Rietveld refinement was performed for the analysis of complete crystal structural property. Surface porosity and specific surface area were observed by Brunnauer-Emmet Teller analysis. Optical properties were observed using UV-Visible spectroscopy. The band gap, optical conductivity, and refractive index calculated were 3.44 eV, 2.63×106, and 0.1164, respectively. Fourier transform infrared spectroscopy was done to analyze the functional and elastic properties of as-prepared nanomaterial. The highest sensor response recorded was 2.14. The response and recovery time at 50 ppm observed were 75.6 and 107.3 s, respectively. The YCeO chemo-resistive sensor confirmed long-term stability and selectivity to CO2 as compared to other gases viz. LPG, NH3, CH4, H2S, NO2 and H2. The relative humidity exposure was also performed at 15, 55 and 95% RH, in which it was confirmed that the sensor would give best response at mid humidity level i.e. 55 %RH. Sensing characteristics curve of YCeO nanocomposite at different temperature (30-90°C) at 50 ppm confirmed that YCeO sensor performed excellent at room temperature. This report unlocks an innovative opening for the fabrication of sensing devices that are room-temperature-operatable, highly-sensitive and selective for quick detection of CO2 gas for its commercialization