Microemulsions (MEs) comprising lutidinium dioctyl sulfosuccinate [Lut][AOT], a biobased ionic liquid (ILs) surfactant as an emulsifier, ([BMIM][PF 6 ]) as a nonpolar phase, and ethanolammonium formate (HO-EAF)/or ethylammonium formate (EAF) as polar components, have been constructed. NMR chemical shifts, surface tension measurements, and isothermal titration calorimetry (ITC) suggest aggregation of [Lut][AOT] in both hydrophilic (EAF or HO-EAF) and hydrophobic ([BMIM][PF 6 ]) ILs. Pseudoternary phase diagrams have been drawn from visual observations and indicated a large monophasic region without assistance of a cosurfactant. ME droplet size and morphology have been analyzed using DLS measurements. Confined IL domains have been used as nanoreactors for the steady-state production of PbSAgS@COOH core−shell nanoparticles (NPs) with a precise control over size and morphology. Synthesized NPs have been characterized using PXRD, XPS, HR-TEM, UV−vis, and fluorescence spectroscopy. PbSAgS@COOH core−shell nanoparticles (NPs) have been applied as a photocatalyst with exceptionally high photodegradation efficiency of dye molecules in aqueous solutions.