Studies of environmentally benign catalytic methods are of great value in modern chemical synthesis, especially the chemo‐selective construction of chemical bonds under green conditions. This work elucidates such preferential synthesis of C−N bond over C−O bond via selective N‐arylation of 3‐aminophenols using 1,3‐bis‐[2‐hydroxyphenyl] imidazolium chloride (IHPHCl) and copper iodide as catalyst (1 mol %) in aqueous medium. Presence of chelating group (−OH) on IHPHCl enhances N‐selectivity. Overall this is a simple and green method for selective N‐arylation of 3‐aminophenols with good substrate scope and yields (60–88 %). GC‐MS, HRMS and other spectroscopic techniques were utilised in detailing the kinetics and mechanistic aspects.