An ionic-liquid-based aqueous two-phase system (iL-ATPS) consisting of an ionic liquid, tributylmethylammonium nitrate (N4441NO(3)), and NaNO3 aqueous solutions was developed for the extraction and separation of rare-earth ions, for example Nd(III), from transition-metal ions. The excellent selectivity of a green nonfluorinated ionic liquid and the low-viscosity feature of an aqueous two-phase system were combined in our suggested iL-ATPS. The results indicated that efficient separation of Nd(III) from transition metal ions, Fe(III), Ni(II), and Co(II), could be obtained in our suggested iL-ATPS. Furthermore, different parameters of the separation process, including the concentrations of HNO3 and NaNO3 and the added amount of N4441NO(3), were optimized. Notably, the extraction kinetics of Nd(III) could be improved significantly in the present iL-ATPS compared with the conventional organic-solvent-based ionic-liquid extraction systems. The similar environment across the liquid liquid interface was revealed by the ultralow viscosity and interfacial tension of the ionic-liquid-rich phase in the iL-ATPS. This feature was responsible for the enhanced extraction kinetics of Nd(III). In addition, the structures of the extraction complexes were elucidated by using NMR spectroscopy and molecular simulations. It was demonstrated that NO3- ions were in the inner coordination shell of Nd(III) ions to interact with Nd(III) ions, while N4441(+) surrounded Nd(III) ions at the outer coordination shell of Nd(III) ions. Moreover, 2 mol/L HNO3 aqueous solutions could be used to effectively strip Nd(III) from the loaded ionic-liquid-rich phase. After 5 cycles, the extraction performance of the ionic liquid remained nearly unchanged. The present work highlights an environmental method to selectively separate rare-earth ions from the complicated solutions coexisting with other transition-metal impurity ions. It provides a basis for the future application in recycling of rare-earth elements from the spent NdFeB magnets.