Aqueous biphasic extraction with an ionic liquid is an excellent strategy for separating multiple substances. In this work, a green aqueous two-phase system (ATPS) composed of a guanidinium ionic liquid (GIL) and phosphate was constructed and used to extract palladium from an acidic solution. The influences of important parameters, including the species and concentration of the GIL and salt, initial Pd(II) concentration in solution, reaction time, equilibrium pH, and temperature on the extraction of palladium, were studied. The results show that up to 100% of Pd(II) efficiently migrates from the lower salt-rich phase to the upper GIL-rich phase and that GIL-based ATPSs exhibit excellent selectivity for palladium under the optimal extraction conditions. Thermodynamic studies show that the increase of entropy serves as the main driving force for the migration of Pd(II). Fourier transform infrared, ultraviolet−visible, proton nuclear magnetic resonance, and X-ray photoelectron spectroscopy characterization methods reveal that the electrostatic interaction between the PdCl 4 2− anion and the GIL cation is the main mechanism for the distribution of Pd(II) in the GIL-rich phase. The anionic PdCl 4 2− transfers to the upper phase by anion exchange with the carboxylate anion in the GIL, and the extraction complex is [2TMG + ] • [PdCl 42− ] in the GIL-rich phase. Finally, the palladium can be successfully recovered from the GIL-rich phase through one-step reduction via hydrazine hydrate. The developed guanidinium-based biphasic system is an environmentally friendly system for the efficient recovery of Pd(II) from solutions.