The naturally occurring polyphenolic compound curcumin has shown various medicinal and therapeutic effects. However, there are various challenges associated with curcumin, which limits its biomedical applications, such as its high degradation rate and low aqueous solubility at neutral and alkaline pH. In the present study, efforts have been directed towards trying to resolve such issues by encapsulating curcumin inside the micelles formed by imidazolium-based surface-active ionic liquid (SAIL). The shape and size of the micelles formed by the SAIL have been characterized by using DLS analysis as well as TEM measurements. The photo-physics of curcumin in the presence of ionic liquid (IL) and also with the addition of salt (NaCl) has been explored by using different optical spectroscopic tools. The time-dependent absorption studies have shown that there is relatively higher suppression in the degradation rate of curcumin after encapsulation by the imidazolium-based SAIL in an aqueous medium. The TCSPC studies have revealed that there is deactivation in the nonradiative intramolecular hydrogen transfer process of curcumin in the presence of IL micelles as well as with the addition of salt. Furthermore, the time-dependent fluorescence anisotropy measurement has been carried out to figure out the location of curcumin inside the micellar system. In order to correlate all experimental findings, density functional theory (DFT) and classical molecular dynamics (MD) simulations at neutral pH media have been performed. It has been found that the van der Waals force of interactions plays a major role in the stabilization of curcumin in the micelles rather than the coulombic forces. It also has been observed that the van der Waals interactions remain unaffected in the presence of salt. However, as revealed by the MD simulation results, the micelles are found to be more compact in size after the addition of salt. The RMSD results show that the micelles formed by the SAIL achieve greater stability after a particular time constraint. Our results have divulged that the SAIL could act as a promising drug delivery system.