The exponentially rising demand for rechargeable energy storage systems along with the market-driven increase of raw materials prices have led to extensive research and development on post lithium-ion battery systems. Among emerging candidates, aluminum-based batteries are particularly appealing due to the abundance of material, low cost, ease of handling in an ambient environment, and high theoretical capacities. To further maximize the benefits of utilizing aluminum, an economical and non-toxic ionic liquid analog, deriving from a mixture of AlCl3 and urea, was employed in an aluminum/natural graphite battery operating at ambient temperature. An average specific capacity of 50 mA h g−1 at 600 mA g−1 (∼12 C) with an average Coulombic efficiency of 96% across 1000 cycles was achieved with ultrasonicated natural graphite flakes. A new electrodeposition mechanism of Al in acidic AlCl3-urea electrolyte is proposed for the first time by taking the contribution of both electroactive cationic (AlCl2 ·(urea)2 +) and anionic (Al2Cl7 −) species into consideration. The concentration of Al2Cl7 − in the electrolyte is suggested to be the limiting factor to the cell-level capacity of AlCl3-urea/graphite battery systems. The results of this study indicate that the practically attainable cell-level specific energy density of AlCl3-urea/graphite battery systems is around 50–60 Whkg−1.