We studied the effect of biaxial tensile and compressive strain on the electronic and optical properties using the density function theory. Electronic properties are investigated in terms of the electronic band structure and density of states. CdO monolayer exhibits a direct bandgap ∼ 1.35 eV using a modified Becke–Johnson approximation. The value of bandgap decreases under both biaxial tensile and compressive strains. Moreover, direct to indirect electronic bandgap transition is observed above 8% tensile strain, whereas direct bandgap nature is conserved under compressive strain. The effective mass of an electron is nearly insensitive to strain, whereas hole effective mass shows linear increment with strain and a sudden jump at the electronic transition point of above 8% tensile strain. The noticed low reflectivity in unstrained and compressive strained conditions suggests that the CdO monolayer may be a promising material for transparent conducting oxide applications. © 2019, The Minerals, Metals & Materials Society.