Suitable functional group-engineered π-conjugated aromatic dimides based on perylene (PDI) and naphthyl scaffolds (NDI) demonstrated excellent sensitivity toward different gaseous analytes. However, to date, no methodical analysis has been performed to rationalize molecular-level interactions in the context of optical transduction, which is essential for systematic performance optimization of NDI/PDI-based molecular sensors. Therefore, in this present work, NDI/PDI scaffolds have been designed with amino acid functional groups (alanine, ALA and glutamic acid, GLU) at the terminal positions, and we subsequently compared the efficacy of four different imide derivatives as model hosts for hydrazine adsorption. Specifically, the adsorption of hydrazine at different interaction sites has been thoroughly investigated using ab initio calculations, where the adsorption energy, charge transfer, and recovery time have been emphasized. Theoretical results exhibit that irrespective of host specification the COOH groups offer a primary interaction site for hydrazine through the hydrogen bonding interaction. The presence of more COOH groups and relatively stronger interaction with secondary edge oxygen ensure that GLU functional moieties are a superior choice over ALU for efficient hydrazine binding. The molecular energy spectrum analysis exhibits more favorable HOMO/LUMO gap variations after hydrazine interaction in the case of PDI derivatives irrespective to the nature of the amino acid residues. Therefore, by a combination of both factors, PDI-GLU has been identified as the most suitable host molecule for hydrazine among four derivatives. Finally, the key theoretical predictions has been later experimentally validated by analyzing UV-visible spectroscopy and NMR studies, wherein the mechanism of interaction has also been experimentally verified by EPR analysis and FT-IR studies.