The electronic band structure and optical properties of the ferroelectric phase III of KNO3 have been investigated by the first-principle pseudopotential method using the density functional theory under the generalized gradient approximation (GGA) and local density approximation (LDA). The calculated band structure shows that the ferroelectric phase III of KNO3 has a direct band gap with a value of 1.76 eV at the point of the first Brillouin zone (BZ). The structural optimization of KNO3 has been performed using the GGA and LDA. The results of the structure optimization have been compared with the experimental results and have been found to be in good agreement with these results. Moreover, the linear photon-energy-dependent dielectric functions and some optical constants such as energy-loss functions for volume and surface, extinction, reflectivity and absorption coefficients, refractive index and effective number of valance electrons per unit cell participating in the interband transitions have been calculated.