Generative artificial intelligence (AI) models trained on natural protein sequences have been used to design functional enzymes. However, their ability to predict individual reaction steps in enzyme catalysis remains unclear, limiting the potential use of sequence information for enzyme engineering. In this study, we demonstrated that sequence information can predict the rate of the SN2 step of a haloalkane dehalogenase using a generative maximum-entropy (MaxEnt) model. We then designed lower-order protein variants of haloalkane dehalogenase using the model. Kinetic measurements confirmed the successful design of protein variants that enhance catalytic activity, above that of the wild type, in the overall reaction and in particular in the SN2 step. On the simulation side, we provided molecular insights into these designs for the SN2 step using the empirical valence bond (EVB) and metadynamics simulations. The EVB calculations showed activation barriers consistent with experimental reaction rates, while examining the effect of amino acid replacements on the electrostatic effect on the activation barrier and the consequence of water penetration, as well as the extent of ground state destabilization/stabilization. Metadynamics simulations emphasize the importance of the substrate positioning in enzyme catalysis. Overall, our AI-guided approach successfully enabled the design of a variant with a faster rate for the SN2 step than the wild-type enzyme, despite haloalkane dehalogenase being extensively optimized through natural evolution.