The dissolution and recovery of microcrystalline cellulose from 1-butyl-3-methylimidazolium chloride, [bmIm][Cl], were studied. At 90 °C and 5 h dissolution time, the regenerated cellulose could be recovered above 80 wt% with a less than 10% decrease in the value of the viscosity-average degree of polymerization, DP(v), regardless of water content. Recovery ratio and DP(v) of regenerated cellulose at 120 °C decreased with time regardless of water content. The regenerated cellulose after dissolution at 120 °C for 10 h regardless of water content had cellulose II structure. Regenerated cellulose at short dissolution times or low temperature had high amorphous content. Both [bmIm][Cl] and [bmIm][Cl] with water act as a non-derivatizing solvent for microcrystalline cellulose at 90 °C, and as a derivatizing solvent at 120 °C. The main effect of added water on the dissolution of cellulose at high temperature was the promotion of cello-oligosaccharide and levoglucosan formation.