Layered materials have attracted extensive attention due to their exceptional physical and chemical properties. Understanding the structural evolution of such materials under high pressure is crucial for the development of new functional materials. In this study, the structure evolution of the synthesized layered rare-earth hydroxyhalide YCl(OH)2 under high pressures up to approximately 9.4 GPa was explored by using a diamond anvil cell combined with synchrotron single-crystal X-ray diffraction. Simultaneously, high-pressure Raman spectroscopy experiment was conducted to 10.3 GPa. Our findings indicate that YCl(OH)2 maintains its symmetry within the experimental pressure range. The pressure-volume data of YCl(OH)2 were fitted to the third-order Birch-Murnaghan equation of state (EoS) to derive its EoS parameters including zero-pressure unit-cell volume (VT0), isothermal bulk modulus (KT0), and its pressure derivative (K'T0): VT0 = 142.47 (1) Å3, KT0 = 38.2 (18) GPa, and K'T0 = 9.8 (1). However, the unit-cell parameters a, b, and c exhibit a distinct compressional behavior, with the a-axis being the most compressible and the b-axis being the least. Particularly noteworthy is the observation that YCl(OH)2 displays a negative linear compressibility along the b-axis within the pressure range of 0.4-5.3 GPa. Further detailed structure refinement and Raman spectroscopy analyses indicate that the anomalous behavior of the b-axis could be attributed to the formation of the O-H···O hydrogen bonding chains along the b direction. Moreover, the coordination number of Y3+ increased from 8 to 9 as the pressure reached 5.3 GPa due to the reduction of the interlayer spacing upon compression, ultimately leading to the closure of the interlayer gap.