Substitution of Fe₂O₃ with 5–20 mol% TiO₂ by flame spray synthesis (FSS) forms solid solutions of single crystal nanoparticles as small as 15.5 nm with a correspondingly high specific surface area (95 m²/g), as confirmed with X-ray diffraction and transmission electron microscopy. Their electronic structure and microstructure lends the solid solution a characteristic which can be exploited for H₂ sensing, more so than with pure α-Fe₂O₃. With a combination of near edge X-ray absorption fine structure spectroscopy, and with electrochemical impedance analysis, that we apply under realistic sensor operation conditions, we are able to qualitatively probe the electronic structure and describe the mechanisms of hydrogen sensing at the molecular scale and correlate the hydrogen sensing property with charge transfer and valence band characteristics.