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.