Overexposure to formaldehyde can pose significant health risk, and much recent research effort has been focusing on the reduction of indoor formaldehyde pollution. Low-dimensional materials with the advantage of having high surface area to volume ratio and abundant active sites have been intensively investigated for their potential use as adsorbents for HCHO. Using density functional theory (DFT) simulations, we predict that nanoflakes of O-terminal titanium carbide MXene, i.e., Ti3C2O2 nanosheets, are able to effectively adsorb formaldehyde. Our results reveal an intermediate adsorption energy of about 0.3 eV per molecule for single molecule adsorption and 0.45 eV for monolayer coverage. These moderate adsorption energies suggest that Ti3C2O2 nanosheets may provide an ideal recyclable material for indoor formaldehyde removal, and, at the same time, facilitate the formaldehyde desorption at higher temperatures. Indeed, our first-principles molecular dynamics (MD) simulation confirms the stability of the adsorption up to 450 K, and desorption of HCHO molecules is observed when the simulation temperature exceeds 500 K. Moreover, we predict an impressively high adsorption capacity exceeding 6 mmol per gram of Ti3C2O2 adsorbent.