Fungi are widely disseminated in the environment and are major food contaminants, colonizing plant tissues throughout the production chain, from preharvest to postharvest, causing diseases. As a result, grain development and seed germination are affected, reducing grain quality and nutritional value. Some fungal species can also produce mycotoxins, toxic secondary metabolites for vertebrate animals. Natural compounds, such as essential oils, have been used to control fungal diseases in cereal grains due to their antimicrobial activity that may inhibit fungal growth. These compounds have been associated with reduced mycotoxin contamination, primarily related to reducing toxin production by toxigenic fungi. However, little is known about the mechanisms of action of these compounds against mycotoxigenic fungi. In this review, we address important information on the mechanisms of action of essential oils and their antifungal and antimycotoxigenic properties, recent technological strategies for food industry applications, and the potential toxicity of essential oils.