Given the accumulated evidence on the effects of water-in-deep eutectic solvents (DESs) on the solvent nanostructure and the yield of lipase reactions, here we have used molecular dynamics (MD) simulations to delineate the structure and dynamics of thermoalkalophilic lipases in choline chloride/urea-based DES (reline) with varying hydration levels. Results indicated that pure reline almost froze the lipase backbone, while hydrated reline that showed a less ordered nanostructure than the pure form introduced some fluctuations to lipase structures, particularly to the lid domain. Although none of the solvents led to unfolding, solvation by 8 M urea or water when accompanied with elevated temperature caused the most significant loss of secondary structure. Experimental results indicated that lipase incubation in slightly hydrated reline [5% (v/v)] led to the highest level of residual activity, implying interfacial activation. Overall, we report that slightly hydrated reline activates thermoalkalophilic lipases, consistent with the particular MD observation showing enhanced mobility of the lid domain. These insights provided by this study contribute to designing efficient lipase applications in DES-based reaction media, giving cues for customizing water-in-DESs for optimal enzyme stability and activity.