alpha-Diazoketones undergo readily O-H insertion reactions with alcohols and water in hydrophilic [bmim]BF4 ionic liquid in the absence of any acid catalyst to furnish alpha-alkoxy and alpha-hydroxy ketones in excellent yields under neutral conditions. The recovered ionic liquid can be easily reused in four to five cycles with consistent in activity. The use of ionic liquid helps to avoid the use of acid catalysts as well as environmentally unfavorable volatile organic solvents.