CdO nanoparticles with different sizes were synthesized by a simple thermal decomposition reaction of precursor obtained by room-temperature solid-state grinding reaction between Cd(CH3COO)22H2O and NaOH in the presence of PEG400. Composition, structure and morphology of the products were analyzed and characterized by X-ray diffraction technology, Transmission electron microscopy and Fourier infrared spectra. The formation of CdO nanoparticles is thought that the nucleation rate of the reactive system is far excess the growth rate of particle. Optical properties of the products were recorded, and the results show that Ultraviolet-visible (UV-vis) spectra exhibit distinct blue shift in comparison with them of the bulk CdO, which is because that the quantum confinement effect of the products is larger than the Coulomb effect. Photoluminescence (PL) spectra exhibit green and red emission bands around 520 and 720 nm respectively.