Protein engineering to improve promiscuous catalytic activity is important for biocatalytic application of enzymes in green synthesis. We uncovered the significance of binding site residues in Arabidopsis thaliana hydroxynitrile lyase (AtHNL) for promiscuous retro-nitroaldolase activity. Engineering of AtHNL has improved enantioselective retro-nitroaldolase activity, a synthetically important biotransformation, for the production of enantiopure β-nitroalcohols having absolute configuration opposite to that of the stereopreference of the HNL. The variant F179A has shown ∼ 12 fold increased selectivity towards the retro-nitroaldol reaction over cyanogenesis, the natural activity of the parent enzyme. Screening of the two saturation libraries of Phe179 and Tyr14 revealed several variants with higher kcat, while F179N showed ∼ 2.4-fold kcat/Km than the native enzyme towards retro-nitroaldol reaction. Variants F179N, F179M, F179W, F179V, F179I, Y14L, and Y14M have shown > 99% ee in the preparation of (S)-2-nitro-1-phenylethanol (NPE) from the racemic substrate, while F179N has shown the E value of 138 vs. 81 by the wild type. Our molecular docking and dynamics simulations (MDS) studies results provided insights into the molecular basis of higher enantioselectivity by the F179N toward the retro-nitroaldolase activity than the other mutants. Binding energy calculations also showed the higher negative binding free energy in the case of F179N-(R)-NPE compared to other complexes that support our experimental low Km by the F179N for NPE. A plausible retro-nitroaldol reaction mechanism was proposed based on the MDS study of enzyme-substrate interaction.