Mercury oxide is a highly toxic  substance which can be absorbed into the body by inhalation of its aerosol, through the skin and by ingestion. The substance is irritating to the eyes, the skin and the respiratory tract and may have effects on the kidneys, resulting in kidney impairment. In the food chain important to humans, bioaccumulation takes place, specifically in aquatic organisms. The substance is banned as a pesticide in the EU.
Evaporation at 20 °C is negligible. HgO decomposes on exposure to light or on heating above 500 °C. Heating produces highly toxic mercury fumes and oxygen, which increases the fire hazard. Mercury(II) oxide reacts violently with reducing agents, chlorine, hydrogen peroxide, magnesium (when heated), disulfur dichloride and hydrogen trisulfide. Shock-sensitive compounds are formed with metals and elements such as sulfur and phosphorus.