Proteus vulgaris L-amino acid deaminase (pvLAAD) belongs to a class of bacterial membrane-bound LAADs mainly express in genus Proteus, Providencia and Morganella. These LAADs employ a non-cleavable N-terminal twin-arginine translocation (Tat) peptide to transport across membrane and bind to bacterial surface. Recent studies revealed that a hydrophobic insertion sequence (INS) in these LAADs also interacts with bacterial membrane. However, the functional significance of INS-membrane interaction is not clear. In this study, we made site-directed mutagenesis on the surface-exposed hydrophobic residues of pvLAAD INS, and we found that these mutations impaired the INS-membrane interaction but did not affect pvLAAD activity in the solution. We further found that when cell membrane is present, the catalytic activity can be increased by 8~10 folds for wild-type but not INS-mutated pvLAAD, indicating that the INS-membrane interaction is necessary for increasing activity of pvLAAD. Molecular dynamic (MD) simulations suggested that INS is flexible in the solution, and its conformational dynamics could lead to substrate channel distortion. Circular dichroism (CD) spectroscopy experiments indicated that bacterial membrane was able to maintain the conformation of INS. Our study suggests the function of the membrane binding of INS is to stabilize pvLAAD structure and increase its catalytic activity.