A biphasic ionic liquid (IL) and compressed carbon dioxide system has a number of advantages for efficient homogeneous catalysis. The hydroformylation of 1-octene to nonanal catalyzed by a rhodium-triphenylphosphine complex was used as a model reaction to illustrate the effects of carbon dioxide in a biphasic ionic liquid/CO2 system using the model ionic liquid, 1-hexyl-3-methyl-imidazolium bis(trifluoromethylsulfonyl)amide ([HMIm][Tf2N]). Detailed phase equilibrium studies were conducted to determine volume expansion of the IL phase and the multiphase equilibria and mixture critical points between the reactant, product, and IL with CO2 and syngas (CO/H-2). These data ultimately affect the concentration of the reactant and, thus, the apparent reaction rate. The viscosity of the IL with CO2 pressure was measured and demonstrates the dramatic decrease with increasing CO2 pressure. The self-diffusion coefficient of the ionic liquid and 1-octene were measured and indicate a large increase with CO2 pressure (solubility). With an understanding of the kinetics, phase behavior, and mass transport, biphasic IL/CO2 reaction systems may be properly understood and designed.