The aim of the present study was to investigate the biological activity of 20 essential oils (EOs) derived from herbal plants and citrus fruits. The in vitro anti-allergic and anti-inflammatory activities of these oils were investigated, and the EO which was found to have the strongest activity of the 20 EOs examined, was investigated further to identify its components and bioactive compounds. The in vitro anti-allergic activity was determined by measuring the release of β-hexosaminidase from rat basophilic leukemia (RBL-2H3) cells treated with the calcium ionophore, A23187. The in vitro anti-inflammatory activity was determined by measuring the production of tumor necrosis factor-α (TNF-α) in RAW264.7 murine macrophages treated with lipopolysaccharide. Among the EOs examined, lemongrass [Cymbopogon citratus (DC.) Stapf] elicited the strongest anti-allergic and anti-inflammatory effects. A principal component of this EO is citral (3,7-dimethyl-2,6-octadien-1-al) (74.5%), a mixture of the stereoisomers, geranial (trans-citral, 40.16%) and neral (cis-citral, 34.24%), as determined by chromatography-mass spectrometry analysis. The activities of citral and geranial are similar to those of lemongrass EO. These compounds elicited significant in vivo anti-allergic and anti-inflammatory effects, suppressing an immunoglobulin E (IgE)-induced passive cutaneous anaphylactic reaction in mice and a 12-O-tetradecanoylphorbol-13-acetate-induced inflammatory mouse ear edema, respectively. Our data demonstrate that lemongrass EO and its constituents, citral and geranial, may be a therapeutic candidate for allergic and inflammatory diseases.