Phenylalanine ammonia-lyase (PAL) plays a central role in the phenylpropanoid pathway and in the treatment of phenylketonuria. However, the integration of PAL into sustainable industrial biocatalysis is hampered by its instability under harsh conditions. This study demonstrates that ionic liquid (IL)-assisted solvent (Tris-HCl buffer) engineering enables improvement of the reaction kinetics and thermodynamic stability of Rhodotorula glutinisPAL (RgPAL) under various stresses. Under optimized conditions, a 66.2% higher Kcat value, >60% remaining activity after 5 weeks of storage at room temperature, and >80% activity of RgPAL after incubation at 60 °C for 1 h were obtained in the [Ch][Ac]-blended Tris-HCl solvent compared to pristine Tris-HCl. The spectroscopic and molecular docking results suggest that the higher extent of hydration and the soft interactions complemented by the ILs with the D-chain residues of RgPAL jointly contributed to achieving more stable and active conformations of RgPAL. The enzyme showed a higher melting temperature (Tm) in ILs+Tris-HCl compared to that in pristine Tris-HCl, with less change in enthalpy (ΔHfu) and entropy (ΔSfu) of unfolding. Overall, IL-mediated solvent engineering alters the microenvironment of RgPAL and allows the development of a robust PAL-based biocatalytic system.