A compact and sensitive dual-gas laser absorption sensor was developed for smoldering peat fire detection by real-time monitoring of transient CO2 and CH4 emissions from peat combustion exhaust. The sensor combines two infrared lasers to exploit CH4 and CO2 absorption lines centered at 6057.09 cm−1 and 6359.96 cm−1, respectively. Scanned-wavelength modulation spectroscopy with the second-harmonic detection (WMS-2f) and a custom-designed Herriot multipass gas cell (10.3 m path length in a 40.5 mL volume) were employed to improve detection sensitivity. The simultaneous real-time transient emissions (CH4 and CO2) were measured at an interval of 0.1 s under various smoldering peat combustion conditions in a top open cylindrical reactor. An increasing trend of CH4/CO2 ratio from 0.053 to 0.075 and the greenhouse gas (GHG) flux from 1.5 g/m2 s to 3.4 g/m2 s was observed with increasing oxygen supplies from 10 mm/s to 24 mm/s. However, a decreasing trend of CH4/CO2 ratio from 0.06 to 0.043 and GHG flux from 2.6 g/m2 s to 0.4 g/m2 s was noticed with increasing peat moisture content from 8% (dry peat) to 100%. The measurement results agree well with commercial non-dispersive infrared CO2 and CH4 analyzers which are not fast enough to capture transient emissions due to their low time response. The developed dual-gas sensor has the potential to be applied for detecting underground peatland fires and evaluating the overall GHGs emissions from smoldering wildfires due to its excellent temporal resolution, hardware simplicity, and compactness.