In this work, a bottom-to-up strategy is adopted to design, fabricate and test a uniformly distributed bismuth nanoparticle-modified carbon cloth electrode for vanadium redox flow batteries (VRFBs). The first-principles study reveals that increasing the number of oxygen-functional groups on the surface of carbon fibers can promote the uniform distribution of electrodeposited bismuth nanoparticles, which increases the effective surface areas and active sites. Results also show that the oxygen-functional groups and bismuth exhibit a synergistically catalytic effect, which enhances the kinetics of redox reactions. Therefore, carbon cloth substrate with a high content of oxygen-functional groups is fabricated and tested. The material and electrochemical characterizations, including scanning electron microscope (SEM), cyclic voltammetry (CV) and electrochemical impedance spectroscopy (EIS), verify the predictions of the first-principles study. Battery tests show that the VRFBs with the prepared electrode enables an energy efficiency of 88.4% at 160 mA cm−2, 19.6% higher than that with the original electrode. Additionally, the battery is capable of delivering an energy efficiency of 80.1% at a high current density of 320 mA cm−2, which are among the highest performances in the open literature. Finally, it is also proved that the prepared bismuth nanoparticle-modified carbon cloth electrode outperforms the bismuth nanoparticle-modified carbon paper electrode, ascribed to the excellent ion/mass transport properties of carbon cloth.