Polypyrrole/single wall carbon nanotube composites were synthesized by in-situ chemical polymerization using pyrrole (PPy) as precursor and single wall carbon nanotubes (SWNTs) as additive component. Electron microscope images reveal that SWNTs component acts as nucleation sites for PPy growth in the form of spherical and cylindrical core-shell structures. The SWNTs/PPy core-shell results in thin n-p junctions which modify the PPy bandgap and reduce the work function of electrons. As a result of the strong coupling, Raman and IR spectra show that the PPy undergoes a transition from polaron to bipolaron state, i.e., indicating an increase in the conductivity. In the UV-Vis spectra, the 340 nm adsorption band (π*-π transition) exhibits a red shift, while the 460 nm adsorption band (bipolaron transition) experiences a blue shift indicating a change in electronic structure and a relocation of polaron levels in the band gap of PPy. The modification in PPy electronic structure brings in a synergistic effect in sensing feature. Upon exposure to oxygen (an oxidizing agent) and NH3 gas (a reducing agent), the PPy/SWNTs nanocomposite shows an enhancement in sensitivity exceeding ten folds in comparison with those of PPy or SWNTs.