We present a systematic high-pressure investigation of the chlorine-functionalized two-dimensional hybrid perovskite (ClPMA)2PbI4, integrating in situ high-pressure synchrotron powder X-ray diffraction (HP-PXRD), photoluminescence spectroscopy (HP-PL), and first-principles density functional theory (DFT) calculations. Under hydrostatic compression up to 6.18 (±0.42) GPa, HP-PXRD reveals anisotropic lattice contraction (Δa/a0 = 4.06%, Δb/b0 = 3.00%, Δc/c0 = 8.66%) with a bulk modulus of 16.8 (±1.5) GPa (K0 = 34.1 TPa–1) and the onset of amorphization near 6.18 (±0.42) GPa. DFT-optimized structures corroborate progressive PbI6 octahedral flattening leading to reduced interlayer spacing and enhanced Cl···I, Cl···H, and I···H interactions. The full elastic tensor indicates moderate anisotropy (AE = 2.1, AG = 2.63) yet large Poisson’s ratios (−0.196 to 0.67), unveiling coexisting auxetic and elastic deformation pathways. HP-PL spectra exhibit a continuous red shift from 525.2 nm to ∼630.5 nm and intensity quenching, attributable to bond-contraction-induced bandgap narrowing and pressure-enhanced nonradiative recombination in the partially amorphous matrix. DFT band-structure calculations confirmed the pressure-dependent direct-gap evolution and maintaining k-space valence-band maximum and conduction-band minimum alignment. These findings elucidate the structural, mechanical, and optoelectronic tunability of (ClPMA)2PbI4, underscoring its promise for strain-engineered optoelectronic devices.