Unveiling the potential application of psychrophilic polymerases as candidates for polymerase-nanopore long-read sequencing presents a departure from conventional choices such as thermophilic Bacillus stearothermophilus (Bst) renowned for its limitation in temperature and mesophilic Bacillus subtilis phage (phi29) polymerases for limitations in strong exonuclease activity and weak salt tolerance. Exploiting the PB-Bst fusion DNA polymerases from Psychrobacillus (PB) and Bacillus stearothermophilus (Bst), our structural and biochemical analysis reveal a remarkable enhancement in salt tolerance and a concurrent reduction in exonuclease activity, achieved through targeted substitution of a pivotal functional domain. The sulfolobus 7-kDa protein (Sso7d) emerges as a standout fusion domain, imparting significant improvements in PB-Bst processivity. Notably, this study elucidates additional functional sites regulating exonuclease activity (Asp43 and Glu45) and processivity using artificial nucleotides (Glu266, Gln283, Leu334, Glu335, Ser426, and Asp430). By disclosing the intricate dynamics in exonuclease activity, strand displacement, and artificial nucleotide-based processivity at specific functional sites, our findings not only advance the fundamental understanding of psychrophilic polymerases but also provide novel insights into polymerase engineering.