Geometrical structure of CdS with vacancy was optimized by using density functional theory (DFT) based on first-principle ultrasoft pseudopotential method. Optimized results showed that the vacancy resulted in local lattice distortion and the relaxation of neighboring atoms. Then vacancy effects on electronic structure (energy-band structure and electron-state density) of CdS were analyzed. The results revealed that S vacancy made the band gap narrower and Cd vacancy made it wider,but CdS with S and Cd vacancy were direct band gap semiconductor. The optical properties of CdS with vacancies were investigated. The results indicated that changes on optical properties mainly focused on low-energy region because of the change of electronic structure of atom neighbor vacancy.