Herein, a high temperature-induced phase transformation (PT) in chemically grown CdO thin films is demonstrated, and its corresponding electronic origin further investigated by density functional theory. In particular, the cubic rocksalt to hexagonal wurtzite PT in the CdO thin film annealed at 900 °C was confirmed by X-ray diffraction (XRD), which was consistent with the high-resolution transmission electron microscopy (TEM) results. Moreover, atomic force microscopy and scanning electron microscopy clearly evidenced the morphological evolution via the formation of a nanosheet network in the wurtzite-phase CdO film. The high temperature treatment also led to a significant enhancement in the optical band gap from 2.2 to 3.2 eV, as manifested by UV-visible spectroscopy. The enhanced surface roughness of the nanosheet caused a deviation in the net dipole moment, which may break the polarizable bonds and help in reducing the average dielectric constant, resulting in a band gap opening for the transformed phase. Furthermore, X-ray absorption spectroscopy at the oxygen k-edge revealed a notable shift in the inflection point of the absorption edge, while the X-ray photoelectron spectroscopy (XPS) Cd 3d and O 1s spectra suggested a gradual reduction in the CdO2 phase with an increase in annealing temperature. In addition, different complementary techniques including Rutherford backscattering and Raman spectroscopy were exploited to understand the aforementioned PT and its structural correlation. Finally, molecular dynamics simulation together with density functional theory calculation suggested that the symmetry modification at the Brillouin zone boundary provides a succinct signature for the PT in the CdO thin film.