This work implements first-principles simulations in order to investigate the Ni-decorating property on the ZnO monolayer and the sensing property of the Ni-decorated ZnO (Ni–ZnO) monolayer upon CO and HCHO molecules formed in the dry-type transformers. The results reveal that the Ni dopant is stably anchored on the T_O site of the ZnO surface forming the Ni–Zn and Ni–O bonds with the binding energy (E_b) of −1.75 eV. Based on the adsorption energy (E_ad) of −1.49 and −2.22 eV for CO and HCHO on the Ni–ZnO monolayer, we determined the chemisorption for two such systems. The band structure (BS) and atomic density of state (DOS) of the gas adsorbed systems are analyzed to comprehend the electronic property of the Ni–ZnO monolayer in the gas adsorptions. Besides, the change of bandgap and work function uncover the sensing potential of Ni–ZnO monolayer upon CO and HCHO detections, with admirable electrical response (15,394.9% and −84.6%). The findings in this work manifest the potential of Ni–ZnO monolayer for CO and HCHO sensing to evaluate the operation condition of the dry-type transformers.