Using Fe(NO3)3·9H2O as raw material, α-Fe2O3 was prepared by the precipitation method. The CO sensitivities of sensors made from the product both in air and N2 backgrounds were tested. It was found that the sensitivities are significantly affected by the pH value of the precipitation solution. The CO gas sensitivity of sensors prepared from materials with different precipitation pH values varies in a manner indicating predominance of different gas sensing mechanisms. The response is also dependent on the operating temperature and the nature of the background stream gas. Based on the experimental results, combined with studies using Fourier transform infrared spectroscopy, X-ray photoelectron spectroscopy, X-ray diffraction and scanning electron microscopy, the possible sensing mechanisms are discussed. It seems that the chemically bonded free cluster OH plays a key role in the improved CO gas sensitivity. The BET method was employed for specific surface area determination.