The chemical reaction between calcium oxide (CaO) and water (H₂O) produces calcium hydroxide (Ca(OH)₂). This reaction is commonly referred to as slaking of lime. The balanced chemical equation for the reaction is:
\[ \text{CaO} + \text{H}_2\text{O} \rightarrow \text{Ca(OH)}_2 \]
Calcium hydroxide is a strong base and is often used in various applications, including construction (in the form of lime mortar), water treatment, and as a food additive.