The reduction of the ferromagnetic exchange with lattice dilation has been studied in EuO films. Films deposited at high substrate temperatures (400°–500°C) show bulk‐like properties and films deposited at lower substrate temperatures (below 350°C) show as much as a 1% room‐temperature lattice dilation with a corresponding 14% blue shift (2.03–2.31 eV) in the room‐temperature optical absorption band and 28% reduction (69°–50°K) in the Curie temperature. This lattice dilation causes a reduction in the cubic crystal field splitting of the 5dlevels, and consequently a shift to higher energy of the 4f7→4f65t2gtransition. The Eu2+&sngbnd;Eu2+interatomic ferromagnetic exchange is reduced via the Goodenough model which involves overlap of a half‐filled 4flevel on one cation with an empty 5dlevel on a neighboring cation.