First-principles calculations are performed to investigate the electro-optic (EO) and elasto-optic effects of the three-dimensional (bulk) and two-dimensional (monolayer) ferroelectric NbOI2. Remarkably large linear EO and elasto-optic coefficients are discovered in both systems, when under stress-free conditions. We further found that the EO responses of bulk and monolayer NbOI2 can be further enhanced with epitaxial strain, because of a strain-driven ferroelectric-to-paraelectric transition that originates from the softening of some polar optical modes. Our findings thus point out that NbOI2, as well as other niobium oxide dihalides are highly promising for paving the way for potential efficient nonlinear optical device applications.