This research aimed to study the effect of essential oil on the mechanical and barrier properties of bio-packaging films from a polymer blend between polybutylene adipate-co-terephthalate and polybutylene succinate (PBAT/PBS) using the β-cyclodextrin (βCD) as controlled release for sweet basil essential oil (ES). PBAT grafted with maleic anhydride (PBAT-g-MA) is used as compatibilizer between polymer matrix and β-cyclodextrin. The MA grating content is found to be 2.47% w/w. The preparation of PBAT/PBS blend films with two weight ratios includes 80/20 and 60/40 with varied βCD-ES contents of 0, 0.25, 0.50, 0.75 and 1.00 phr. Tensile strength and elongation at break were increased when β-cyclodextrin with essestial oil decreasing. Considering the ratio of PBAT/PBS, the mechanical properties i.e., tensile strength, Young’ s modulus and elongation at break of PBAT/PBS film at weight ratio of 80/20 incorporated with βCD-ES were higher than the ones at weight ratio of 60/40. For barrier properties, water vapor and oxygen permeability of PBAT/PBS films incorporated with lower essential oils content would be decreased. For antimicrobial test, PBAT/PBS with βCD-ES film packaging could effectively inhibit the mold growth on tomatoes after 40 days.