The metal oxide-based nanostructures of variable size and shape are found effective in optimizing the gas sensing ability and pollutant degradation. The size induced lattice strain and large band gap in 3nm CeO 2 quantum dots evolved the ability towards hydrogen gas sensing and dye degradation compared to nanopebbles and nanoparticles of sizes 15 ± 3, and 30 ± 12 nm. The smaller CeO 2 quantum dots than Debye length was found underlying reason for nearly four times sensor response and selectivity towards reducing hydrogen gases than the oxidizing gases at 1-10 ppm level. The lattice strain calculated by Rietveld refinement and W-H analysis was found in-line with the size of CeO 2 nanostructures. The enhancement in lattice strain and optical band gap (2.66, 2.78, and 2.89 eV) with decrease in size are found critical for determining the overall efficiency of CeO 2 nanostructures for photocatalytic activity, attributed to the strong quantum confinement effect. The higher catalytic activity of 98 % was achieved CeO 2 quantum dots in comparison to the 95 % and 94 % obtained for CeO 2 nanopebbles and nanoparticles. The impact of change in degradation efficacy and gas sensing ability of different CeO 2 nanomaterials is discussed in detail. This work offers a novel and simplistic method to produce CeO 2 quantum dots as an efficient sensor for selective detection of H 2 gas and photocatalyst. The correlation between size, Debye length, band gap, and lattice strain gives an insight for understanding the underlying detection mechanism for selective detection of reducing gas molecules and efficient pollutant remediation.