Abstract Conventional metal oxide semiconductor (MOS) hydrogen sensors rely on surface oxygen‐mediated redox reactions, while the distinct contributions of each type of oxygen species, including weakly adsorbed oxygen (O W ), strongly adsorbed oxygen (O S ), and lattice oxygen (O L ), to sensing performance remain poorly understood, hindering the rational design of sensing materials. Here, through precisely controlling Ar pre‐treatment at tailored temperature and calculation of electron transfer numbers, we quantitatively study the distinct oxygen species contributions of the gas‐sensitive Pd‐decorated In 2 O 3 (Pd‐In‐O) nanosheets during the H 2 sensing process, and O S species are found to play a crucial role in hydrogen sensing. The in situ characterizations reveal that the oxygen vacancies boost the activation and mobility of O S species and optimize the d ‐band center of Pd, further promoting the reaction kinetics and accelerating the hydrogen spillover from Pd to In 2 O 3 . Additionally, the surface oxygen species of Pd‐In 2 O 3 with varying activities are rationally designed, and the Pd‐In‐O sample with the highest activity demonstrates a robust H 2 ‐sensing performance even at room temperature (R a /R g = 20.1 to 200 ppm H 2 at 25 °C). The as‐fabricated sensor is further applied for real‐time detection of the simulated hydrogen leakage in the laboratory.