Recently, a miniaturized variant of an artificial luciferase (ALuc), named picALuc, with a molecular weight of 13 kDa and thus, the smallest luciferase, was reported. While picALuc was found to be as active as the ALuc, questions remained on the structural organization and residue-residue interactions in the protein. Here, combining structural modeling, molecular dynamics (MD) simulations and mutational analysis, we show that the loss of a salt bridge interaction formed by Glu50 (E50) residue results in an increased enzymatic activity of picALuc. Specifically, we generated a model of picALuc using the available structure of the Gaussia luciferase (GLuc) and performed a 1 μs long Gaussian accelerated molecular dynamics (GaMD) simulation which revealed a general compaction of the protein structure as well as residue level interactions in the protein. Given that picALuc contains a number of charged residues, we focused our attention to salt bridge interactions and decided to mutate E10, E50 and D94 that were found to form a fluctuating, stable or a new salt bridge interaction, respectively. Live cell assays showed an enhanced bioluminescence in cells expressing the E50A mutant picALuc while in vitro assays revealed an increased Vmax of the E50A mutant without affecting its thermal stability. Dynamic cross-correlation and principal component analyses of the GaMD simulation trajectories revealed altered collective dynamics in the protein, in which residue E50 contributed substantially. Finally, we developed a protein fragment complementation assay using picALuc that allows monitoring protein-protein interaction in live cells. We envisage that the brighter variant of picALuc and the protein fragment complementation assay reported here will find a general applicability in developing bioluminescence-based assays and the strategy developed here will pave the way for further engineering of brighter variants of picALuc.