Electrochemical CO2 reduction (CO2RR) on copper (Cu) shows promise for higher‐value products beyond CO. However, challenges such as the limited CO2 solubility, high overpotentials, and the competing hydrogen evolution reaction (HER) in aqueous electrolytes hinder the practical realization. We propose a functionalized ionic liquid (IL) which generates ion‐CO2 adducts and a hydrogen bond donor (HBD) upon CO2 absorption to modulate CO2RR on Cu in a non‐aqueous electrolyte. As revealed by transient voltammetry, electrochemical impedance spectroscopy (EIS), and in‐situ surface‐enhanced Raman spectroscopy (SERS) complemented with image charge augmented quantum‐mechanical/molecular mechanics (IC‐QM/MM) computations, a unique microenvironment is constructed. In this microenvironment, the catalytic activity is primarily governed by the IL and HBD concentrations; former controlling the double layer thickness and the latter modulating the local proton availability. This translates to ample CO2 availability, reduced overpotential, and suppressed HER where C4 products are obtained. This study deepens the understanding of electrolyte effects in CO2RR and the role of IL ions towards electrocatalytic microenvironment design.