Enhancing the performance of anode supported honeycomb solid-oxide fuel cells via operating at higher temperatures is of great interest. However, working at a higher temperature leads to a significant rise in thermal stresses over the allowable limit. Thus, in the current study, functionally graded electrodes are considered to avoid cell failure due to higher thermal stresses. To assess the cell performance and thermal stress distribution, a theoretical investigation of a solid-oxide fuel cell with a honeycomb configuration using functionally graded electrode compositions is conducted through a comprehensive 3D model. The developed model includes the charge transport, mass and momentum transport, energy conservation, electrochemical reaction kinetics, and elastic stress. The model is numerically simulated and validated with the available experimental data. Results indicate that using functionally graded electrodes with grading index m = 1 significantly improves the fuel cell's performance, with an improvement in power density reaching around 60%. In addition, the most beneficial improvement is to reduce thermal stresses at elevated temperatures, for which the maximum value of equivalent stress is reduced to 85% less than the conventional electrode at a temperature of 1150 °C. Accordingly, the fuel cell's maximum power density can be obtained by operating at elevated temperatures with safe thermal stresses. These improvements are particularly attractive for applications requiring compact, reliable, and high-power devices based on fuel cell technology.