We report on a novel colorimetric sensor system for highly sensitive detection of formaldehyde (FA) in the gas phase. The sensor is constructed with paper towel as a substrate coated with the sulfuric acid salt of hydroxylamine ((NH2OH)2·H2SO4) together with two pH indicators, bromophenol blue and thymol blue. Upon exposure to FA, the hydroxylamine will react with the absorbed FA to form a Schiff base (H2C=N-OH), thus releasing a stoichiometric amount of sulfuric acid, which in turn induces a color change of the pH indicator. Such a color change was significantly enriched by incorporating two pH indicators in the system. With the optimized molar ratio of the two pH indicators, the color change (from brown to yellow, and to red) could become so dramatic as to be visible to the eye depending on the concentration of FA. In particular, under 80 ppb of FA (the air quality threshold set by WHO) the color of the sensor substrate changes from brown to yellow, which can even be envisioned clearly by the naked eyes. By using a color reader, the observed color change can be measured quantitatively as a function of the vapor concentration of FA, which produces a linear relationship as fitted with the data points. This helps estimate the limit of detection (LOD), to be 10 ppb under an exposure time of 10 min, which is much lower than the air quality threshold set by WHO. The reported sensor also demonstrates high selectivity towards FA with no color change observed when exposed to other common chemicals, including solvents and volatile organic compounds. With its high sensitivity and selectivity, the proposed paper-based colorimetric sensor thus developed can potentially be employed as a low-cost and disposable detection kit that may find broad application in detecting FA in indoor air and many other environments.