The VisionCube is a 2-unit CubeSat developed in-house, of which the primary mission is aimed at detecting the occurrence of transient luminous events in the upper atmosphere and obtaining corresponding images from the low Earth orbit. An on-board TLE observation system of the VisionCube cubesat is designed and developed by incorporating a photon-sensitive MaPMT and a CMOS image sensor. Also, a distinctive TLE observation software which enables detecting the TLEs and capturing images in a timely manner is devised. By taking into account the limited resources of a small CubeSat in size and power, the on-board observation system is developed employing a system-on-chip design architecture by which both hardware and software can be integrated seamlessly. The purpose of this study is to investigate the functionality of the hardware and the validity of the software algorithm to show the on-board system will operate properly with no human intervention during the space operation. To this end, a ground simulation facility is constructed to emulate the space environment of the TLE occurrence using a set of UV LEDs inside a darkbox. Based on the analysis of the spectral and temporal properties of the TLEs, the randomly generated UV LED pulses are opted for verification scenarios for the TLE observation system. The validation results show that the hardware and the software algorithm of the on-board observation system can effectively detect the TLEs and obtain the images during the on-orbit operation.