The large number of oxygen-containing functional groups present on the surface of low-grade coal contribute to its strong hydrophilic properties and rendering coal beneficiation by flotation challenging. In this study, a magnetic ionic liquid (IL), [C12mim]FeCl4, was developed as a green medium to treat low-rank coal. Notably, the IL can be recovered using a magnetic field. The interactions between the low-rank coal and the IL were analyzed, and the structure and properties of [C12mim]FeCl4 were characterized using Raman spectroscopy, Fourier-transform infrared (FT-IR) spectroscopy, and vibrating-sample magnetometry. Moreover, the effects of the newly prepared IL on the wetting properties of low-rank coal were studied using water contact angle measurements. The contact angle of the coal sample treated with the IL increased initially but decreased with subsequent increase in treatment time, indicating a change in coal wettability with time. The results from FT-IR analysis show that the changes in contact angles may be attributed to the changes to the oxygen-containing functional groups at the coal surface upon interaction with the IL, where the content of oxygen-containing functional groups in the treated coal sample initially decreased but subsequently increased with increase in treatment time. X-ray photoelectron spectroscopy analysis confirmed these results. Thus, it can be concluded that [C12mim]FeCl4 initially destroys the oxygen-containing functional groups at the coal surface, resulting in an increase in the water–coal contact angle but subsequently promoting oxidation of the coal surface, hence causing a reduction in the contact angle.