At the most basic level, stress is our bodys response to pressures from a situation or lifes event. Although in short occurrence or at optimum level stress may be considered to have positive effects, excess and prolonged stress can cause physiological as well as psychological health disorders. Stress cannot be avoided or omitted, but one can reduce or manage the level of stress using several relaxation techniques. Through age-long research, listening to music has been proven to be a powerful tool for stress reduction. Music has been reported to have direct effects on nervous system, immunological and endocrine system of the human body. Amongst various neuroimaging techniques,electroencephalogram(EEG) is a useful electrophysiological biomarker to monitor the neuronal activities of the human brain with high temporal resolution. In research setting EEG signals are used in mental stress study. The present article attempts to review scientific literature in support of the pivotal role of music on stress reduction. Discussions on stress and its effects on human health are followed by the quantification of stress by EEG for identification and classification of stress. The role of music on stress reduction has been discussed with a light on musical neurofeedback as an effective measure for stress reduction. This comprehensive review would provide theoretical support for claims that music would act as stimuli for stress characterization and also would have its ability to serve as effective and potential measure for stress reduction in everyday life.