Graphene is a two dimensional one-atom thick sheet of sp2 bonded carbon atoms arranged in a honeycomb lattice structure. It has high electron mobility and it is the material with the lowest resistivity at room temperature. By changing the edge properties with chemical modification, few-layer graphene may gain new magnetic properties. Besides having unusual electronic properties, single-layer graphene has important gas sensing capability. With the adsorption of the gas molecules, the local carrier concentration of graphene is modified and its resistance is altered. The high mobility, large area ohmic contact and metallic conductivity of graphene help to reduce the background noise and thus make it highly sensitive device even small molecular changes at atomic ranges. In this dissertation, Chemical Vapor Deposition (CVD) grown graphene layers were functionalized by self-assembled monolayers (SAMs) and etched anisotropically by H2 for the first time to improve sensor characteristics for toxic gas sensing. CO, CO2, NH3 gases were used as target molecules. Characterization techniques such as Optical Microscopy, Scanning Electron Microscopy (SEM), Atomic Force Microscopy (AFM), Kelvin Probe Force Microscopy (KPFM), Raman Spectroscopy, Quartz Crystal Microbalance (QCM) and amperometric measurements were used for the investigation of the metal thin film, graphene layers and gas adsorbed film structures. Results indicate that the SAM modification enhanced CO and NH3 absorbing capability of graphene films and also improved their periodic reversible response characteristics. The resistivity results are consistent with frequency change results. Humidity sensitivity of sensors are also decreased significantly due to the applied etching process.