Due to the differences in the treatment methods of the electron–ion interaction and the critical strain mode of the transition from semimetals to semiconductors, the corresponding strain modulation mechanism in layered bismuth (Bi) crystals remains elusive. In this work, the effects of van der Waals (vdW) correction on the crystal structure and electrical properties of Bi in an equilibrium/strained state are comparatively studied based on the density functional theory. It is found that vdW corrections can better describe the layered crystal and bandgap structure of Bi under equilibrium/strain conditions. With the vdW modification, bismuth can be converted from a semimetal to a semiconductor within a small compression range that is experimentally available. This transition is induced by the transfer of the conduction band minimum and the valence band maximum and is related to the competition of the near-band edge energy state near the Fermi level of bismuth. The present results not only provide guidance for the accurate study of the crystal structure and electronic properties of complex model systems, such as Bi or Bi-based inherently nanostructured materials, but also reveal strain regulation mechanism of Bi and predict its potential application in the semiconductor electronic devices.