We prepared PdO nanoflake thin films by reactive sputter deposition and studied their gas-sensing response to CO at temperatures below 250 C. The PdO thin film, which has a large open surface area allowing for rapid and extensive CO adsorption, exhibits a complicated CO sensing behavior. At temperatures below 150 C, the electrical conductance of the thin film drops upon the exposure of the CO/dry air gas mixture. The CO sensing mechanism in this temperature range is described by the oxygen ionosorption model. At 150 C, oscillatory response occurs when the CO concentration is larger than 2000 ppm. The oscillatory response is due to the reactivity switching between the PdO reduction and reoxidation reactions. In addition, the PdO thin film shows a rapid increase in the conductance before and after the oscillatory response regime. The conductance increase is ascribed to the positive charge accumulation at the interface between the PdO thin film and metal Pd nanoislands, which are formed during the PdO reduction. At temperatures higher than 150 C, the conductance drops when the PdO thin film is exposed to CO. Besides the ionosorption model, the oxygen vacancy model is used to account for the CO sensing response of the thin film in the high-temperature range. On the basis of the inverse change in the CO sensing sensitivity at 150 C, a CO sensor of high selectivity, which integrates two PdO sensing elements operating independently at 150 C and a lower temperature, is proposed.