The use of biocompatible ionic liquids (bio-ILs) as a "green" solvent with uniquely tunable cations and anions, specific selectivity, and many other desirable physicochemical properties in biocatalysis has shown great promises to address many challenges. A plethora of studies have demonstrated ILs possess a range of exceptional capabilities in coordinating biocatalysis such as stabilizing enzyme structure, enhancing enzyme-substrate interaction, increasing substrate solubility and product separation/removal, and improving enzyme immobilization/recycling. Therefore, bio-ILs have been explored for biocatalysis in a wide range of homogenous as well as multiphasic systems including biphasic, multiphasic, microemulsion, and whole-cell systems. This review provides an overview of IL-enabled biocatalysis including enzymatic and whole-cell reactions in homogeneous and multiphasic systems. First, the properties of IL concentration, specific ion effect, pH, viscosity, alkyl chain length, hydrophobicity, and polarity on the structures and activities of enzymes are discussed together with characterization techniques to elucidate the mechanisms of IL-enzyme interactions. Second, while homogenous biocatalysis systems containing ILs are briefly introduced and summarized, particular attention is given to multiphasic systems. Furthermore, recent progress in using bio-ILs to modify emerging new enzyme carrier materials including carbonaceous and magnetic nanomaterials, gel microspheres, and membranes as well as their effect on increasing enzyme stability and recycling are highlighted. Finally, we provide our expert opinion for more innovative research in the field and future outlook for the industrial application of ILs in biocatalysis.