Iodide-based ionic liquids have been widely employed as iodide sources in electrolytes for applications utilizing the triiodide/iodide redox couple. While adding a low-viscosity solvent such as water to ionic liquids can greatly enhance their usefulness, mixtures of highly viscous iodide-containing ILs with water have never been studied. This paper investigates, for the first time, mixtures of water and the ionic liquid 1-butyl-3-methylimidazolium iodide ([BMIM][I]) through a combined experimental and molecular dynamics study. The density, melting point, viscosity, and conductivity of these mixtures were measured by experiment. The composition region below 50% water by mole was found to differ dramatically from the region above 50% water, with trends in density and melting point differing before and after that point. Water was found to have a profound effect on viscosity and conductivity of the IL, and the effect of hydrogen bonding was discussed. Molecular dynamics simulations representing the same mixture compositions were performed. Molecular ordering was observed, as were changes in this ordering corresponding to water content. Molecular ordering was related to the experimentally measured mixture properties, providing a possible explanation for the two distinct composition regions identified by experiment.