Biocompatible Ionic Liquids (Bio-ILs) are a new class of ILs that are task-specifically designed to derive from naturally occurring compounds and/or derivatives thereof, as well as molecules well known for their biocompatibility (e.g., active pharmaceutical ingredients or non-toxic bioactive compounds) in terms of sustainability and biocompatibility. Owing to their remarkable physicochemical properties that can be tailor made to comply with the requirements of each application, Bio-ILs have emerged as novel, efficient and green technology, appropriate for a vast variety of scientific fields. Herein, this review describes the state-of-the-art scientific research regarding the synthesis, characterization and applications of Bio-ILs reported in the literature for the period between 2020 and 2022.