The structure and morphology of thin NiO films prepared on Ag(001) by reactive growth at 460 K has been investigated as a function of the film thickness in the 3-20 monolayers range. Emphasis was on the study of the oxide layer misfit strain. Primary beam diffraction modulated electron emission and low energy electron diffraction experiments allowed the determination of the in-plane and out-of-plane strain in the oxide layer, while scanning tunneling microscopy, X-ray photoelectron spectroscopy and secondary electron imaging have been used to monitor the film morphology, stoichiometry and structure, respectively. The film strain begins to be removed at a critical thickness of 10 ML, while at 20 ML the film is fully relaxed. Strain analysis indicates that the Poisson ratio of the oxide layer is nearly equal to that of the bulk material.