In the present study, the physicochemical properties of AlCl3 and urea mixtures, a potential electrolyte for Al-ion batteries, are investigated by changing the molar ratio of AlCl3/urea in the range of 1.0–1.6. In recent years, Al-ion batteries are receiving growing attention due to the high abundance and low cost of Al, ease of handling in an ambient environment, and high theoretical capacities. A urea-based electrolyte is a cost-effective and environmentally friendly alternative to expensive 1-Ethyl-3-methylimidazolium chloride ([EMIM]Cl) based electrolyte for Al-ion batteries. Several characterization techniques such as nuclear magnetic resonance spectroscopy, electrochemical impedance spectroscopy, and linear sweep voltammetry are used to determine the speciation of ionic moieties, ionic conductivity, and electrochemical stability of this complex system. Based on the obtained results, the best composition was used as an electrolyte in an Al-ion battery, which delivered a specific capacity of 74 mAh g–1 at 100 mA g–1.