A functional [C4mimCl]CoCl2 ionic liquid was prepared by directly mixing cobalt chloride (CoCl2) with 1-n-butyl-3-methylimidazolium chloride (C4mimCl). Oxone (KHSO5) was selected as an oxidizing agent and, together with [C4mimCl]CoCl2, formed an extraction/catalytic oxidation system for the desulfurization of fuels. Compared with the Fenton-like desulfurization systems, the oxone solid is cheaper, more stable, and less corrosive than liquid H2O2. The results indicated that a S-removal efficiency of 97.7% can be achieved under optimal experimental conditions (i.e., 2g of [C4mimCl]CoCl2, initial S content of 500ppm, 6g of dibenzothiophene (DBT) in n-octane, 1g of oxone solution, 50°C, and 65min). The [C4mim]Cl/CoCl2 ionic liquid showed a very good recycling performance (i.e., the S removal efficiency remained above 96% after 6 consecutive desulfurization processes). The removal of different sulfur compounds in octane after 65min followed the trend DBT>4,6-dimethyldibenzothiphene (4,6-DMDBT)>benzothiophene (BT) with S removal efficiencies of 97.7, 93.7, and 74.0%, respectively. According to the gas chromatography coupled with mass spectrometry (GC–MS) analysis, the oxidative product was identified as DBTO2, and a possible sulfur removal mechanism was predicted. The [C4mimCl]CoCl2ionic liquid displayed a dual function (i.e., catalytic and extractive agents) during the desulfurization process.