Naphthalene diimide derivatives (NDIs) have exhibited significant potential for sensing applications owing to their excellent photo-stability, environmental stability, reasonable electronic conductivity, and ability to form nanostructures with diverse morphologies through self-assembly. However, no systematic analysis has been performed to rationalize molecular-level interactions between ammonia (NH₃) and functionalized NDI probes, which is essential for systematic performance optimizations of NDI-based NH₃ sensors. Therefore, this work proposes a phenylalanine-functionalized NDI derivative (NDI-PHE) as a model host for NH₃ adsorption. Subsequent molecular interactions have been comprehensively studied following a complementary approach using ab initio calculation and experimental investigation. Specifically, NH₃ adsorption at different atomic positions of NDI-PHE has been investigated using ab initio calculation, where the adsorption energy, charge transfer, and recovery time have been emphasized. The environmental stability of NDI-PHE and the underlying transduction mechanism during NH₃ adsorption have been experimentally demonstrated to complement the theoretical analysis. The results exhibit that the presence of phenylalanine groups acts as an anchoring moiety and augments NH₃ adsorption via hydrogen bonding and proton transfer interaction. Specifically, a highly stable room temperature adsorption of NH₃ near a carboxylic phenylalanine group has been observed with a suitable recovery time at higher temperatures. NH₃ adsorption results in electron transfer to the host molecule leading to the formation of stable radical anion species, which significantly modulated the frontal molecular orbitals of NDI-PHE, suggesting superior transduction for both electrochemical and optical detection.