We performed first-principles calculation to investigate the effect of epitaxial strain on lattice instabilities and polarization behavior of BaTiO3/SrTiO3 artificial lattice with very short stacking period, i.e., BaTiO3 1 unit cell/SrTiO3 1 unit cell (BTO/STO). The structural analysis of BTO∕STO artificial superlattice under in-plane compressive state showed enhanced stability of the tetragonal phase. On the other hand, the stability of monoclinic phase was enhanced when the BTO∕STO was in the in-plane tensile state. The phase transition from tetragonal to the monoclinic phase occurs at the misfit strain of −0.25%. As the misfit strain of BTO∕STO superlattice increases from −0.25% to −1.5% (in-plane compressive state), the tetragonal superlattice exhibits an increasing polarization along the  direction. In the monoclinic phase, the polarization of the superlattice rotates progressively toward  direction with increasing the misfit strain, and the magnitude of the polarization simultaneously increases with the rotation. The first-principles study shows that the phase stability and polarization vector is sensitively influenced by the lattice misfit strain.