Over the last decade graphene based electronic devices have attracted the interest of researchers due to their exceptional chemical, electrical and optical properties. Graphene is very sensitive to any physical changes in its surrounding environment and, inherently, has very low electronic noise. This property of graphene makes it a suitable candidate for sensor applications. The purpose of the work presented in this article is to demonstrate the ability of graphene derivatives to detect toxic organic compounds like phenol and methanol. A novel method for the detection of organic compounds (phenol and methanol) has been introduced in this article. In this method, a change in the photocurrent, as well as electric current, have been used as detection signals to improve the sensor accuracy and selectivity for specific target molecules. A nanoscale electronic device simulator, Quantumwise Atomistix Toolkit (ATK), has been used to simulate graphene nanosheet and armchair graphene nanoribbon based sensors. Devices density of states (DOS), current–voltage curves and photocurrent curves have been calculated with the ATK simulator. In the proximity of target molecules, a significant change in DOS, electric current and photocurrent have been observed. The simulated graphene based structures can be converted into physical sensors to obtain a low cost, small sized, integrated sensing device.