The reduction of CO2 into value-added chemicals offers a promising approach to mitigate air pollution while simultaneously generating economic value. In this context, the chemical fixation of CO2 into epoxides to generate cyclic carbonates is a sustainable technique due to its high atom efficiency. In this work, we report the preparation of simple iron-based ionic liquids (ILs) derived from hexacyanoferrate(III), (Fe(CN)6), which exhibit remarkable activity and selectivity toward cyclic carbonate formation. Molecular dynamics (MD) simulations demonstrate that the contact ion pair organization in the IL is anisotropic, exhibiting a distinct spatial arrangement. The IL efficiently catalyzed the conversion of various epoxides using only 1.0 mol % IL under mild conditions (1–2 bar, 70–100 °C). Moreover, solid catalysts containing ionic liquid layers (SCILLs), akin to catch-and-release catalytic systems, are developed that demonstrate remarkable activity, achieving turnover numbers (TONs) of 265–729 for aliphatic epoxides and 83–668 for aromatic epoxides, with 99% selectivity toward cyclic carbonates under the same mild conditions. A monolayer of IL enhances local charge density by aligning cations and anions into distinct layers on SiO2, therefore creating nanoconfined spaces within the SCILL (solid catalysts with IL layer). These confined domains function as a “catch-and-release” catalytic system, controlling the diffusion of epoxides, CO2, and intermediates toward the active sites while facilitating the release of products from the microionic environment. An in situ NMR study conducted under realistic experimental conditions revealed that the reaction mechanism involves the formation of 1-n-butyl-3-methylimidazolium-2-carboxylate (NHC–CO2) intermediate, thereby challenging the classical understanding of IL-assisted catalysis and providing new fundamental insights into the field.