Lavender (Lavandula angustifolia L.) is one of the world's top 15 most traded essential oil plants. Lavender oil is obtained from lavender which is widely used as an independent alternative medication as well as a component in medicine and cosmetic products. Lavender oils include over 100 chemicals, with linalool and linalyl acetate being the two most prominent. Furthermore, it also contains phytosterols, coumaric acid, anthocyanins, monosaccharides, valeric acid, glycolic acid and its esters, ursolic acid, coumarin, and herniarin. These components are beneficial for human health due to their functional and nutraceutical properties. Moreover, lavender oil has many nutritional and therapeutic effects, i.e., antiinflammatory, antioxidant, hypnotic, antidepressant, anticonvulsive, antihair fall, antimicrobial, and antifibrotic. Due to its antimicrobial activity, it is also used as preservative agent in many food products. Furthermore, it is also used in many food, cosmetics, and pharmaceutical industries as a functional ingredient. In this chapter, we discussed the historical background, production, nutritional composition, and therapeutic potential of lavender oil.