The present work reports a comparison of direct or indirect (water‐mediated) interactions of surface active ionic liquid SAIL, tetrabutylammonium dodecylsulphate (TBADS) in aqueous solutions of glycine with those of sodium dodecylsulphate (SDS) in same solvent system, by employing techniques like conductivity, fluorescence, UV–Vis probe studies and clouding phenomenon. High hydrophobicity and penetrating ability of TBA+ counterions and most significant salting‐out effect due to the preferential hydration of glycine molecules accounts for the enhanced micellization and better surface activity of TBADS as compared to its conventional analogue SDS. Further, driving force for the micellization in both the cases is the hydrophobic interactions, whereas in the case of SDS, London dispersion interactions as alternative forces also contribute considerably at higher temperatures. In addition, the decrease in the cloud point (Tcp) of aqueous TBADS solutions in the presence of glycine is attributed to the dehydration of hydrophilic head groups of micelles, resulting in their collapse and hence phase separation.