We discuss the structural and electronic properties of tetragonal CuO grown on SrTiO3(100) by means of hybrid density functional theory. Our analysis explains the anomalously large Cu-O vertical distance observed in the experiments (~2.7 A) in terms of a peculiar frustration between two competing local Cu-O environments characterized by different in-plane and out-of-plane bond lengths and Cu electronic populations. The proper inclusion of substrate effects is crucial to understand the tetragonal expansion and to reproduce correctly the measured valence band spectrum for a CuO thickness of 3-3.5 unit cells, in agreement with the experimentally estimated thickness.