Gd-based nanomaterials offer interesting magnetic properties and have been heavily investigated for magnetic resonance imaging. The applicability of these materials beyond biomedical imaging remains limited. The current study explores the applicability of these rare-earth nanomaterials as nanozyme-mediated catalysts for colorimetric sensing of l-cysteine, an amino acid of high biomedical relevance. We show a facile solution-based strategy to synthesize two Gd-based nanomaterials viz. Gd(OH)3 and Gd2O3 nanorods. We further establish the catalytic peroxidase-mimic nanozyme activity of these Gd(OH)3 and Gd2O3 nanorods. This catalytic activity was suppressed specifically in the presence of l-cysteine that allowed us to develop a colorimetric sensor to detect this biologically relevant molecule among various other contaminants. This suppression, which could either be caused due to catalyst poisoning or enzyme inhibition, prompted extensive investigation of the kinetics of this catalytic inhibition in the presence of cysteine. This revealed a competitive inhibition process, a mechanism akin to those observed in natural enzymes, bringing nanozymes a step closer to the biological systems.