The mechanism by which the 2-hydroxyethylhydrazinium nitrate (HEHN) ionic liquid (IL) dissociates via the formation and loss of nitric acid is investigated utilizing the effective fragment potential (EFP) method and various ab initio methods. Additionally, the interactions that dictate the stability of the HEHN IL and contribute to the formation of nitric acid are further assessed using the quasi-atomic orbital (QUAO) bonding analysis. From this work, it is suggested that the formation of nitric acid is dictated by the presence of hydrogen-bonding interactions which appear to become increasingly ionic in nature as the system approaches the bulk, limiting the formation of nitric acid.