To investigate the underlying mechanism by which trehalose acts as a bioprotectant against thermal denaturation of protein in aqueous solution, we carry out classical molecular dynamics simulations at two different temperatures. Though it is widely accepted that trehalose acts as an antidote against such protein structural destabilization and numerous hypotheses have been proposed in regard to its mechanism of stabilization, there is still no definitive generally accepted answer to this question and it remains a subject of active research. In view of this, in this article we report the thermal denaturation process of a 15-residue S-peptide analogue at 360 K temperature and the counteracting ability of trehalose of varying concentrations at that temperature. In order to verify the conformational stability of the peptide at ambient temperature condition, we also carry out a separate simulation of peptide-water binary system at 300 K temperature. The goal is to provide a molecular level understanding of how trehalose protects protein at elevated temperature. The Ca-rmsd calculation shows that in pure water, the peptide is stable at 300 K temperature and its unfolding is observed at 360 K. However, in peptide-water-trehalose ternary system, the value of Ca-rmsd decreases as trehalose concentration is increased. Remarkably, at the highest trehalose concentration considered in this study, the value of Ca-rmsd at 360 K is similar to that of water-peptide binary system at 300 K temperature. Further, the calculations of radius of gyration of Ca-atoms and helical percentage of the peptide residues support the above observations. The total number of hydrogen bonds formed by the peptide with solution species (trehalose and water) remains constant, though the peptide water hydrogen bond decreases and peptide trehalose hydrogen bond increases with increasing trehalose concentration. This finding suggests replacement of water molecules by trehalose molecules and supports water replacement hypothesis. The calculations of preferential interaction parameter show that at the peptide surface, trehalose molecules are slightly more preferred over water and for the most concentrated solutions, a prominent exclusion of water and enrichment of trehalose molecules is observed. Also observed are (i) trehalose-induced second shell collapse of water structure, (ii) the growth of trehalose cluster as concentration is increased, and (iii) trehalose-induced slowing down of the translational motion of both water and trehalose, the effect being more pronounced for the latter. Implications of these results for counteracting mechanism of trehalose are discussed.