Basil has been used for thousands of years in Ayurveda for its diverse healing properties. The juice of the leaves have strong expectorant properties, and is used in ailments of the respiratory system. This study investigated the immunomodulatory and antibacterial properties of, Panchatulasi drops, a unique blend of essential oils from 5 different species of basil. The effect of the essential oils on proinflammatory mediators (IL-6 and TNF-), and cell viability was determined in a dose dependent manner, using a rat splenocyte model. Immunomodulation via lipoxygenase inhibition was investigated, using lipoxygenase inhibitor screening kit. MIC against Streptococcus pneumoniae strains was determined by the broth dilution method with Cation adjusted MuellerHinton broth (CAMHB), and antibacterial efficacy was also tested using a neutropenic mouse model of lung infection against ATCC 700904 Streptococcus pneumoniae strain.Panchatulasi drops demonstrated inhibition of IL-6 and lipoxygenase enzyme. It resulted in increased levels of TNF- in a dose dependent manner in non-cytotoxic doses (up to 10µg/ml), although overall concentration decreased between 24 to 72 h. after LPS induction. The extracts exhibited good antimicrobial activity with an MIC of 32 µg/ml and bacterial load reduction of 6.45 ± 0.55 at 150 mg/kg bw, compared to 5.32 ± 0.62 of amoxicillin (p<0.005). These studies provide significant evidence of immunomodulatory and antimicrobial properties of Panchatulasi drops. The formulation could, therefore, be developed as a potential therapy in inflammatory conditions such as respiratory infections and mucosal injury.