Sandalwood trees are small, evergreen, hemiparasitic plants. One of the most extensively and commonly used essential oil can be extracted from sandalwood trees known as sandalwood essential oil. Sandalwood essential oil is one of the most valuable essential oil. It is largely used in perfumery, cosmetics, and aromatherapy industries. The utilization of naturally occurring substances has been encouraged not only due to their nontoxic behavior but also due to their capability to modulate various signaling pathways involved in the growth of multiple diseases. Sandalwood essential oils are used for the treatment of fever, common colds, burns, headaches, infection of the urinary tract, bronchitis, etc. It is also used as antiseptic, antispasmodic, vaginitis, urethritis, gonorrheal recovery, antipyretic, antiscabietic, expectorant, stimulant, and diaphoretic agent. The importance of this plant is not only confined to industrial and therapeutic applications, this plant has a role in various cultural rituals of Asian households. The essential oil extracted from this plant is very costly, and researchers are still working on a daily basis to improve the quality and quantity of the essential oil so that it can meet the enormous demand of the international market. This chapter is an attempt to rediscover and rearrange all the relevant literature associated with production, method of extraction, chemical composition, properties, storage, therapeutic benefits, toxicity, regulation, potential, and future prospects of sandalwood essential oil in a single place so that it will help anyone interested in this topic to conduct future studies.