Fundamental understanding of charge transfer reaction is essential for the surface and interface engineering of transition metal oxides. In this study the chemical reactivity towards oxygen and hydrogen (13 Pa) under applied thermal conditions (423 - 673 K), of two polymorphic forms of Fe₂O₃ nanoparticles (γ-Fe₂O₃ and α-Fe₂O₃) are investigated with the combination of in situ ambient pressure X-ray photoelectron spectroscopy (AP-XPS) and near edge X-ray absorption fine structure spectroscopy (AP-NEXAFS). Our data show that the reactivity of these two polymorphs has a similar character based on the contribution of oxygen vacancy defect states and related material non-stoichiometry. Their exposure to hydrogen at increased temperature results in both cases in the surface reduction. However, γ-Fe₂O₃ exhibits more covalent character and undergoes the reduction preferentially with a contribution of metallic Fe⁰ than Fe²⁺, in contrast to α-Fe₂O₃. Further, upon introduction of oxygen at low temperature of 423 K, rapid re-oxidation process takes place at the Fe₂O₃ nanoparticles surface. Prepared γ-Fe₂O₃ and α-Fe₂O₃ nanostructures exhibit in general high n-type and p-type sensor response towards hydrogen, respectively, in a wide concentrations range.