The application of essential oils in food and pharmaceutical sectors face several challenges due to their sensitivity to oxidation process. Additionally, the biosynthesis of nanometals is growing rapidly; however, the toxicity of these particles against living organisms did not well explore yet. This study aimed to determine the bioactive compounds in basil essential oil (BEO) using GC-MS, to encapsulate and characterize BEO and to evaluate its protective role against the oxidative stress and genotoxicity of biosynthesized iron nanoparticles (Fe-NPs) in rats. Six groups of male Sprague-Dawley rats were treated orally for 4 weeks included the control group, Fe-NPs-treated group (100 mg/kg b.w.); EBEO-treated groups at low (100 mg/kg b.w.) or high (200 mg/kg b.w.) dose and the groups treated with Fe-NPs plus the low or the high dose of EBEO. The GC-MS analysis revealed the identification of 48 compounds and linalool was the major compound. The average sizes and zeta potential of the synthesized Fe-NPs and EBEO were 60 ± 4.76 and 120 ± 3.2 nm and 42.42 mV and -6.4 mV, respectively. Animals treated with Fe-NPs showed significant increase in serum biochemical analysis, oxidative stress markers, cytokines, lipid profile, DNA fragmentation and antioxidant enzymes and their gene expression and severe changes in the histology of liver and kidney tissues. Administration of Fe-NPs plus EBEO alleviated these disturbances and the high dose could normalize most of the tested parameters and improved the histology of liver and kidney. It could be concluded that caution should be taken in using the biosynthesized metal nanoparticles in different application. EBEO is a potent candidate to protect against the hazards of metal nanoparticles and can be applied in food and medical applications.