With the help of the first-principles full potential linearized augmented plane wave method, absorption coefficients, reflectivity, dielectric behavior and electronic properties, including electronic energy bands, density of states and charge density distributions, are studied for the tetragonal and cubic CaTiO3. By considering the thermal expansion effects, an approximate method is proposed for the study of the stability of ground state and a tendency of phase transition, based on the minimum free energy principle. Subsequently, numerical calculations are carried out by using the first-principles perturbation method. We demonstrate that the high-temperature phase is cubic. It is shown that optical spectra in tetragonal phase exhibit single-peak feature and differ from multi-peak character in cubic. We find that strong orbital hybridization results in the co-valent bonds between Ti 3d and O 2p electrons and forms two-type dipoles (Ti-O1 and Ti-O2) in tetragonal, while the Ti-O dipoles are identical in cubic. It is argued that crystal structure determines the dipole distributions and leads to some electron states among which the dipole-dipole transition forbidden is a key, causing such anomalous optical phenomena with the insulator characteristics. The predicted charge density distribution and the tendency of phase transition from tetragonal to cubic are in good agreement with experimental observations.