Pupil size primarily changes to regulate the amount of light entering the retina, optimizing the balance between visual acuity and sensitivity for effective visual processing. However, research directly examining the relationship between pupil size and visual processing has been limited. While a few studies have recorded pupil size and EEG signals to investigate the role of pupil size in visual processing, these studies have predominantly focused on the domain of visual sensitivity. Causal effects of pupil size on visual acuity, therefore, remain poorly understood. By manipulating peripheral background luminance levels and target stimulus contrast while simultaneously recording pupillometry and EEG signals, we examined how absolute pupil size affects visual discrimination and visually evoked potentials (VEP) in a task using optotype mimicking the Snellen eye chart, the most common assessment of visual acuity. Our findings indicate that both higher background luminance levels and higher target contrast were associated with improved target discrimination and faster correct reaction times. Moreover, while higher contrast visual stimuli evoked larger VEPs, the effects of pupil size on VEPs were not significant. Additionally, we did not observe inter-individual correlations between absolute pupil size and discrimination performance or VEP amplitude. Together, our results demonstrate that absolute pupil size, regulated by global luminance level, played a functional role in enhancing visual discrimination performance in an optotype discrimination task. The differential VEP effects of pupil size compared to those of stimulus contrast further suggested distinct neural mechanisms involved in facilitating visual acuity under small pupils.