In recent years, ionic liquids have received increasing interests as an effective demulsifier due to their characteristics of non-flammability, thermal stability, recyclability, and low vapor pressure. In this study, emulsion formation and types, chemical demulsification system, the application of ionic liquids as a chemical demulsifier, and key factors affecting their performance were comprehensively reviewed. Future challenges and opportunities of ionic liquids application for chemical demulsification were also discussed. The review indicted that the demulsification performance was affected by the type, molecular weight, and concentration of ionic liquids. Moreover, other factors, including the salinity of aqueous phase, temperature, and oil types, could affect the demulsification process. It can be concluded that ionic liquids can be used as a suitable substitute for commercial demulsifiers, but future efforts should be required to develop non-toxic and less expensive ionic liquids with low viscosity, and the demulsification efficiency could be improved through the application of ionic liquids with other methods such as organic solvents.