We present a combined stress and structural analysis of the growth of epitaxial NiO monolayers on Ag(001). Our experimental results indicate an unexpectedly complex interface formation, where a fraction of the first NiO monolayer (ML) is embedded into the Ag surface. This interface formation induces a tensile surface stress change. Subsequent deposition leads to a layer-by-layer growth of NiO up to 5 ML. Here, the average film stress is compressive -5.8 GPa, and it corresponds quantitatively to the misfit-induced stress. Our density functional calculations complement the experimental results by identifying the proper O-Ag bonding geometry in the ML regime from two indistinguishable options as provided by the analysis of surface x-ray diffraction data.