Long-chain polyunsaturated fatty acids (LC-PUFAs), such as eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA), are essential for health but difficult to obtain sustainably, making engineered microbial production an attractive alternative. LC-PUFAs are produced in certain marine protists via iterative decarboxylative Claisen condensation catalyzed by the ketosynthase-chain length factor (KSB-CLF). However, the molecular mechanisms governing substrate recognition, chain-length control, and catalytic efficiency of KSB-CLF remain poorly understood. Here, we employ a combination of computationally guided design, mutagenesis, and in vitro assays to unravel the structural basis of Schizochytrium-KSB-CLF activity and to enhance LC-PUFA production. Structural analyses identified a conserved catalytic triad (C196-H332-H367) within the KSB domain. Additionally, key electrostatic residues (K302, R541, R636) were shown to mediate binding with acyl carrier protein (ACP) and acyl-CoA. Rational engineering of hydrophobic substrate channel residues yielded a F235W mutant with 77% and 28% enhanced activity toward C18-CoA and C20-CoA, respectively, attributed to channel elongation and cavity expansion. Engineering Schizochytrium strains with the F235W mutation increased EPA and docosapentaenoic acid (DPA) yields without negatively impacting biomass or lipid production. Together, these findings provide a mechanistic framework for PUFA synthase optimization and mark a significant step toward scalable, sustainable production of nutritionally vital omega-3 fatty acids.