Mentha (also known as peppermint), a genus of plants in the taxonomic family Lamiaceae (mint family), is widely distributed throughout temperate regions of the world. Mentha contains various constituents that are classified as peppermint essential oil (PEO) and non-essential components. PEO, consisting mainly of menthol, menthone, neomenthol and iso-menthone, is a mixture of volatile metabolites with anti-inflammatory, antibacterial, antiviral, scolicidal, immunomodulatory, antitumor, neuroprotective, antifatigue and antioxidant activities. Mounting evidence indicates that PEO may pharmacologically protect gastrointestinal, liver, kidney, skin, respiratory, brain and nervous systems, and exert hypoglycemic and hypolipidemic effects. Clinically, PEO is used for gastrointestinal and dermatological diseases, postoperative adjuvant therapy and other fields. This review aims to address the advances in the extraction and isolation of PEO, its biological activities, pharmacological effects, toxicity and applications, with an emphasis on the efficacy of PEO on burn wounds and psoriasis, providing a comprehensive foundation for research, development and application of PEO in future.