The improvement of the thermoelectric performance (determined by the ZT value) of materials is limited by the inter-correlation of the transport coefficients. By performing first principle calculations combined with semi-classical Boltzmann theory, we have systematically investigated the geometric, electronic and thermoelectric properties of AgTaO₃ under external strain. It is demonstrated that the electronic structure and phonon transport can be modified independently. Compressive strain along the c-axis decreases the energy separation between the light and heavy valence bands and generates multiple valence band valleys near the Fermi level. Such band structure modification greatly enhances the Seebeck coefficient for the p-type doped compound, which is increased from 600 μV K⁻¹ (δ_c = 0%) to 690 μV K⁻¹ (δ_c = −5%). Similarly, tensile strain softens the chemical bonding, favoring the reduction of thermal conductivity. Therefore, the improvement in the thermoelectric performance of AgTaO₃ under strain suggests that strain engineering is a generally applicable route to enhancing the Seebeck coefficient and ZT in thermoelectric materials.