Monolayer transition metal dichalcogenide heterojunctions, including vertical and lateral p-n junctions, have attracted considerable attention due to their potential applications in electronics and optoelectronics. Lattice-misfit strain in atomically abrupt lateral heterojunctions, such as WSe2-MoS2, offers a new band-engineering strategy for tailoring their electronic properties. However, this approach requires an understanding of the strain distribution and its effect on band alignment. Here, we study a WSe2-MoS2 lateral heterojunction using scanning tunnelling microscopy and image its moiré pattern to map the full two-dimensional strain tensor with high spatial resolution. Using scanning tunnelling spectroscopy, we measure both the strain and the band alignment of the WSe2-MoS2 lateral heterojunction. We find that the misfit strain induces type II to type I band alignment transformation. Scanning transmission electron microscopy reveals the dislocations at the interface that partially relieve the strain. Finally, we observe a distinctive electronic structure at the interface due to hetero-bonding.