Nucleic acid sample storage is of paramount importance in biotechnology and forensic sciences. Very recently, hydrated ionic liquids (ILs) have been identified as ideal media for long-term DNA storage. Hence, understanding the binding characteristics and molecular mechanism of interactions of ILs with DNA is of both practical and fundamental interest. Here, we employ molecular dynamics simulations and spectroscopic experiments to unravel the key factors that stabilize DNA in hydrated ILs. Both simulation and experimental results show that DNA maintains the native B-conformation in ILs. Simulation results further suggest that, apart from the electrostatic association of IL cations with the DNA backbone, groove binding of IL cations through hydrophobic and polar interactions contributes significantly to DNA stability. Circular dichroism spectral measurements and fluorescent dye displacement assay confirm the intrusion of IL molecules into the DNA minor groove. Very interestingly, the IL ions were seen to disrupt the water cage around DNA, including the spine of hydration in the minor groove. This partial dehydration by ILs likely prevents the hydrolytic reactions that denature DNA and helps stabilize DNA for the long term. The detailed understanding of IL-DNA interactions provided here could guide the future development of novel ILs, specific for nucleic acid solutes.