Large language model (LLM) agents have demonstrated impressive capability in utilizing external tools and knowledge to boost accuracy and reduce hallucinations. However, developing the prompting techniques that make LLM agents able to effectively use external tools and knowledge is a heuristic and laborious task. Here, we introduce AvaTaR, a novel and automatic framework that optimizes an LLM agent to effectively use the provided tools and improve its performance on a given task/domain. During optimization, we design a comparator module to iteratively provide insightful and holistic prompts to the LLM agent via reasoning between positive and negative examples sampled from training data. We demonstrate AvaTaR on four complex multimodal retrieval datasets featuring textual, visual, and relational information. We find AvaTaR consistently outperforms state-of-the- art approaches across all four challenging tasks and exhibits strong generalization ability when applied to novel cases, achieving an average relative improvement of 14% on the Hit@1 metric.