A new method for detection of Volatile Organic Compounds (VOCs) is studied by using an optical waveguide sensor. The sensitive element was synthesized by Sol-Gel method and characterized with XRD pattern. The sensor was fabricated by coating the In2O3 thin film over a tin-doped glass OWG. The OWG sensor was fixed on the gas sensor system to detect the VOCs gases. The results show that the thin film has high sensitivity towards xylene gas at room temperature .This sensor responds significantly to 1×10-6(volume ratio) of xylene vapor.