We report the influence of uniaxial tensile mechanical strain in the range 0-2.2% on the phonon spectra and bandstructures of monolayer and bilayer molybdenum disulfide (MoS2) two-dimensional crystals. First, we employ Raman spectroscopy to observe phonon softening with increased strain, breaking the degeneracy in the E' Raman mode of MoS2, and extract a Grüneisen parameter of ~1.06. Second, using photoluminescence spectroscopy we measure a decrease in the optical band gap of MoS2 that is approximately linear with strain, ~45 meV/% strain for monolayer MoS2 and ~120 meV/% strain for bilayer MoS2. Third, we observe a pronounced strain-induced decrease in the photoluminescence intensity of monolayer MoS2 that is indicative of the direct-to-indirect transition of the character of the optical band gap of this material at applied strain of ~1%. These observations constitute a demonstration of strain engineering the band structure in the emergent class of two-dimensional crystals, transition-metal dichalcogenides.