Layered 2D metal hydroxides and oxides with solvated ions inside their layers are well-known materials for energy storage applications. Although thin-film layered alpha-cobalt hydroxide (α-Co(OH)2) is recognized as one of the promising candidates among many other 2D materials, it still suffers from its poor stability in alkali solution i.e., 6 M KOH. In this work, the charge storage mechanism and the electrochemical performance of α-Co(OH)2 in a room-temperature ionic liquid (IL) namely 1-butyl-1-methyl-pyrrolidinium dicyanamide ionic liquid ([BMPyr+][DCA−] IL) were investigated and compared with those in 6 M KOH. Interestingly, α-Co(OH)2 in [BMPyr+][DCA−] IL maintains their capacity retention up to 95.9% after 10,000 cycles at 0.15 mA cm−2 for the half-cell evaluation. The asymmetric cell of thin-film α-Co(OH)2//reduced graphene oxide aerogel (rGOae) assembled in [BMPyr+][DCA−] IL electrolyte provides a high areal capacitance of 18.54 F cm−2 (28.6 F g−1) at 0.15 mA cm−2 as compared with other thin-film supercapacitors. The charge storage mechanism of α-Co(OH)2 in [BMPyr+][DCA−] IL investigated by in situ X-ray absorption spectroscopy (XAS) and ex situ X-ray photoelectron spectroscopy (XPS) confirms that [DCA−] can faradaically react with α-Co(OH)2 providing CoOOH and NH(CN)2. Understanding charge storage mechanism of 2D metal hydroxides may be useful for future development of energy storage technology.