German chamomile (Matricaria chamomilla L.) is a promising and easy to cultivate crop under suitable nutrient supply conditions, but acidic soils of Indian western Himalayas limit the availability of phosphorus to the plant and reduce flower production. Thus, a field experiment was conducted for two consecutive seasons (2018–2019 and 2019–2020) to study the effect of phosphorus dynamics and biostimulant application on the agro-morphological traits, essential oil (EO) yield, and chemical constituents of German chamomile in the mid hills of the western Himalayan region. The experiment consisted of 12 treatments, four phosphorus fertilizer levels (0, 30, 60 and 90 kg ha−1) and three biostimulants levels (control, amino acid at 5 mL L−1, and humic acid at 10 mL L−1). The experiment was replicated three times in a factorial complete randomized block design (FRBD). Agro-morphological and yield characteristics were significantly higher in phosphorus at 90 kg ha−1 and humic acid application compared to the control. Dry flower and EO yield was 17.87 and 26.76% higher with the 90 kg ha−1 phosphorus application while 2.45 and 5.79% higher in humic acid at 10 mL L−1 compared to the control. The EO constituents viz., chamazulene was 12.04 and 8.85% higher in phosphorus at 90 kg ha−1 and humic acid at 10 mL L−1 application compared to the control. On the other hand, α-bisabolol oxide B and α-bisabolol oxide A were decreased with increase in phosphorus application. This study presents novel facts, elucidation, and explanation for farmers and industrialists to produce German chamomile in acidic soils by integrating biostimulants with phosphorus fertilization and getting maximum yield and quality EO.