Fibroblast growth factor 21 (FGF21) is pivotal in regulating energy metabolism, highlighting substantial therapeutic potential for non-alcoholic steatohepatitis (NASH). Previously, we reported a long-acting FGF21 fusion protein, PsTag-FGF21, which was prepared by genetically fusing human FGF21 with a 648-residue polypeptide (PsTag). While this fusion protein demonstrated therapeutic efficacy against NASH, our final product analysis revealed the presence of fixed impurities resistant to effective removal, indicating potential degradation of PsTag-FGF21. Here, we enriched and analyzed the impurities, confirming our hypothesis regarding the C-terminal degradation of PsTag-FGF21. We now describe a new variant developed to eliminate the C-terminal degradation. By introducing one mutation located at the C-terminal of PsTag-FGF21(V169L), we demonstrated that the new molecule, PsTag-FGF21(V169L), exhibits many improved attributes. Compared with PsTag-FGF21, PsTag-FGF21(V169L) displayed elevated bioactivity and stability, along with a twofold enhanced binding affinity to the coreceptor β-Klotho. In vivo, the circulating half-life of PsTag-FGF21(V169L) was further enhanced compared with that of PsTag-FGF21. In NASH mice, PsTag-FGF21(V169L) demonstrated efficacy with sustained improvements in multiple metabolic parameters. Besides, PsTag-FGF21(V169L) demonstrated the ability to alleviate NASH by decreasing hepatocyte apoptosis. The superior biophysical, pharmacokinetic, and pharmacodynamic properties, along with the positive metabolic effects, imply that further clinical development of PsTag-FGF21(V169L) as a metabolic therapy for NASH patients may be warranted.