To address the urgent issues of hazardous gas detection and the prevention of environmental pollution, various functional materials for gas sensing and catalytic reduction have been studied. Specifically, the p-type perovskite LaFeO3 has been studied widely because of its promising physicochemical properties. However, there remains several problems to develop a controllable synthesis of LaFeO3-based p-n heterojunctions. In this work, α-Fe2O3 was further compounded with LaFeO3 to form a porous and hollow α-Fe2O3/LaFeO3 heterojunction to improve its gas-sensing performance and photocatalytic efficiency via a microwave-assisted hydrothermal method. While evaluated as sensors of acetone gas, the optimized sample exhibits excellent performance, including a high response (48.3), excellent selectivity, good reversibility, fast response, and recovery ability. Furthermore, it is an efficient catalyst for the degradation of methylene blue. This can be attributed to the enhancement effect of its larger specific surface area, fast diffusion, enhanced surface activities, and p-n heterojunction. Additionally, this work provides a rapid and rational synthesis strategy to produce metal oxides with both enhanced gas-sensing performance and improved photocatalytic properties.