The synthesis and anion‐recognition properties of the first halogen‐bonding rotaxane host to sense anions in water is described. The rotaxane features a halogen‐bonding axle component, which is stoppered with water‐solubilizing permethylated β‐cyclodextrin motifs, and a luminescent tris(bipyridine)ruthenium(II)‐based macrocycle component. 1H NMR anion‐binding titrations in D2O reveal the halogen‐bonding rotaxane to bind iodide with high affinity and with selectively over the smaller halide anions and sulfate. The binding affinity trend was explained through molecular dynamics simulations and free‐energy calculations. Photo‐physical investigations demonstrate the ability of the interlocked halogen‐bonding host to sense iodide in water, through enhancement of the macrocycle component’s RuII metal–ligand charge transfer (MLCT) emission.