Decoupling electrical and thermal parameters in figure of merit (zT) is still a major challenge for thermoelectric materials. Layered oxyselenides have the advantages of superlattice structures, including the quantum confinement effect and independent dominant electrical and thermal transport in different layers, making them possible to potentially decouple the parameters. Here, we report a dual role mechanism of the Cu-Se layer in simultaneously enhancing carrier transport and blocking heat transport in typical layered oxyselenide BiCuSeO via biaxial strain modulation by solving the Boltzmann transport equation (BTE) based on first-principles calculations. Under biaxial strain, the distorted CuSe4 tetrahedra not only help to increase the electrical conductivity while maintaining a high Seebeck coefficient due to the reduced effective mass and increased band degeneracy, but also help to strongly scatter the heat-carrying phonons through the abundant three-phonon channels it (the distorted CuSe4 tetrahedra) creates. As a result, in the 4 % compressive pristine BiCuSeO, there is a 4-fold improvement in the power factor and a 2.3-fold improvement in zT (0.5) at 300 K compared to the unstrained system. Our work provides new insights into the decoupling of electrical and thermal transport in layered systems and paves a potential way to regulate thermoelectric performance by manipulating the polyhedral distortion in related materials.