Nicotinoproteins are a group of NAD⁺-dependent dehydrogenases that bind NAD⁺ tightly and catalyze reactions without using free NAD⁺. In this study, we investigated the role of the unique insertion loop in nicotinoproteins. Carveol dehydrogenase (CADh), a short-chain dehydrogenase/reductase (SDR) nicotinoprotein, and β-hydroxybutyrate dehydrogenase from Alcaligenes faecalis (AfBHBDh), a non-nicotinoprotein counterpart, were used as model enzymes. An insertion loop-deleted mutant, CADh Δ39–49, was constructed. An insertion loop from Mycobacterium paratuberculosis CADh (MpCADh) was introduced into AfBHBDh to generate the two mutants. The results showed that CADh Δ39–49 lost NAD⁺ tight binding capacity and could not utilize free NAD⁺. In contrast, the AfBHBDh mutants showed no dye-mediated dehydrogenase activity. Moreover, the K_M and K_D values for NAD⁺ were higher than those of the wild-type enzyme. Docking simulations revealed a stronger binding affinity between NAD⁺ and the mutants than with the wild-type AfBHBDh. Taken together, these results suggest that the insertion loop interferes with NAD⁺ entry into the active site of the enzyme while creating a more energetically favorable binding environment. This loop is necessary but alone is insufficient to achieve NAD⁺ tight binding. This study deepens understanding of NAD⁺ binding in SDR nicotinoproteins and provides insights for SDR enzyme engineering.