The conductivity and sensing stability of yarn-based strain sensors are still challenges when it comes to practical applications. To address these challenges, surface engineering of polyurethane (PU) yarn was introduced to improve its surface hydrophilicity for better deposition of MXene nanosheets in its dispersion. The introduction of Ag nanoparticles via magnetron sputtering greatly improved the surface conductivity; meanwhile, the encapsulation of the PDMS protective layer effectively enhanced the sensing stability over 15,000 cycling process, as well as the working range with a gauge factor value over 700 under a strain range of 150–300%. Moreover, the exploration of its applications in human motion monitoring indicate that the prepared strain-sensing yarn shows great potential in detecting both tiny motions or large-scale movements of the human body, which will be suitable for further development into multifunctional smart wearable sensors or metaverse applications in the future.