In the present work, copper oxide thin films have been deposited at different substrate temperatures from 250 to 400 °C by spray pyrolysis technique. The desired properties of phase pure CuO with good crystal quality and conductivity have been optimized with respect to pyrolytic temperature. X-ray diffraction studies and Hall effect measurements indicated that these two properties are achieved at an optimum temperature of 350 °C. The band gap of CuO films was found to decrease from 1.8 to 1.2 eV with increase in substrate temperature, based on the UV-absorption spectrum of the film. The microstructures revealed that the film optimized at 350 °C, showed uniform surface with trapezium shaped particles, which are well compacted. The dynamic sensing behavior of the optimized p-type CuO sensor, prepared at a substrate temperature of 350 °C, was used to sense ethanol for concentrations: 100 and 200 ppm. The response time and the recovery time were within the range of 15–20 s and 15–18 s, respectively. The results revealed good response even at room temperature, with characteristics dependent on the size of the grains and the concentration of ethanol.