The idea of strain based manipulation of spins in magnetic two-dimensional (2D) van der Waal (vdW) materials leads to the development of new generation spintronic devices. Magneto-strain arises in these materials due to the thermal fluctuations and magnetic interactions which influences both the lattice dynamics and the electronic bands. Here, we report the mechanism of magneto-strain effects in a vdW material CrGeTe₃ across the ferromagnetic (FM) transition. We find an isostructural transition in CrGeTe₃ across the FM ordering with first order type lattice modulation. Larger in-plane lattice contraction than out-of-plane give rise to magnetocrystalline anisotropy. The signature of magneto-strain effects in the electronic structure are shift of the bands away from the Fermi level, band broadening and the twinned bands in the FM phase. We find that the in-plane lattice contraction increases the on-site Coulomb correlation (U_eff) between Cr atoms resulting in the band shift. Out-ofplane lattice contraction enhances the d − p hybridization between Cr–Ge and Cr–Te atoms which lead to band broadening and strong spin-orbit coupling (SOC) in FM phase. The interplay between U_eff and SOC out-of-plane gives rise to the twinned bands associated with the interlayer interactions while the in-plane interactions gives rise to the 2D spin polarized states in the FM phase.