A cavity-modified master equation is derived for a coherently driven, V-type three-level atom coupled to a single-mode cavity in the bad-cavity limit. We show that population inversion in both the bare- and dressed-state bases may be achieved, originating from the enhancement of the atom-cavity interaction when the cavity is resonant with an atomic dressed-state transition. The atomic populations in the dressed-state representation are analyzed in terms of the cavity-modified transition rates. The atomic fluorescence spectrum and probe absorption spectrum are also investigated, and it is found...