This study investigates the structural performance of a redesigned AAR Type E knuckle coupler using finite element analysis (FEA). The modified knuckle incorporates geometric reinforcement in critical load-bearing regions together with a hollow internal structure aimed at reducing component weight while maintaining structural integrity. Two numerical models were developed: a component level model, in which the knuckle was analyzed independently, and an assembly-level model that integrates the knuckle with the coupler body to capture realistic load transfer through contact interactions. Both models were subjected to a tensile draft load of 650,000 lbs (2670 kN) in accordance with Association of American Railroads (AAR) standards. The component-level analysis predicted peak von Mises stresses of approximately 1050 MPa, primarily concentrated near the pivot pin hole and curved pulling face regions. When contact interactions between the knuckle and coupler body were included in the assembly model, the representative peak stress decreased to approximately 950 MPa, corresponding to a stress reduction of about 10% due to load redistribution across the assembly interfaces. Highly localized stress peaks at sharp geometric edges were identified as numerical stress singularities and were excluded from engineering interpretation. The results demonstrate that assembly-level finite element modeling provides a more realistic representation of load transfer mechanisms in railway coupler systems and is essential for accurately predicting stress distribution and identifying critical fatigue-prone regions. These findings provide valuable insights for improving the structural reliability and design optimization of freight rail coupler components.