Inert gases, although widely used in various industries, can pose a risk of asphyxiation, making it crucial to detect and monitor their presence. However, creating sensors for inert gases is difficult because these gases have a very unreactive chemical nature, which means they don’t readily interact with other substances. This work was carried out to investigate the transport properties of inert gas sensors based on palladium-clusters-decorated-graphene-sheets (Pd–Gr) using Density Functional Theory (DFT) based methodology. The sensors comprising Pd clusters Pdn (n = 2–5) decorated graphene were simulated to investigate the structural stability, adsorption, sensitivity, and electronic characteristics. The transport properties were studied using current–voltage (I–V) curves obtained via non-equilibrium Green’s function (NEGF). The current appeared small at the start due to higher electrical resistance caused by charge transfer due to the adsorption of inert gases on the sensors. However, a voltage-dependent increase in the current took place afterward. The values of the resistance are found sensitive to the adsorption of the inert gases onto the sensors which helped to detect the gases. The energy difference of frontier molecular orbitals contributing to the conduction exhibited different responsive voltages which helped to points to the gas being adsorbed on the sensor. The Amsterdam Density Functional (ADF) package’s BAND and DFTB modules were used to apply the linear combination of atomic orbitals (LCAO) approach throughout the whole computation process. The graphical user interface (GUI) was used to set up the input, and calculations with periodic boundary conditions were carried out. Built-in Slater-type orbitals (STO), TZ2P basis set and a hybrid functional B3LYP were used as the level of theory to establish the exchange correlation between electrons. The frozen core was adjusted to none and spin–orbit coupling was used to take relativistic factors into account and for all electron interactions. The adsorption energies were calculated which predicted that Pd2–Gr sensor has good sensitivity towards neon and xenon with − 0.363 eV and − 0.645 eV adsorption energy and 67% and 84% sensor response, respectively. The sensor Pd3-Gr appeared more effective in the detection of krypton gas having an adsorption energy of − 1.185 eV and 73% sensor response. Helium happened to be detected by Pd4–Gr Sensor with 91% sensor response and adsorption energy of − 1.194 eV. Similarly, Pd5–Gr Sensor is found more effective for sensing radon (− 0.669 eV) and argon (− 0.902 eV) gases with sensor response of 49% and 61% respectively. Pd6–Gr Sensor has least adsorption energy which indicates that the Pd6–Gr sensor is not a favorable sensor for sensing of inert gases.