Medicinal plants are one of the most important sources of drugs used in the pharmaceutical industry. Among traditional medicinal plants, Lippia gracilis Schauer (Verbenaceae) had been used for several medicinal purposes in Brazilian northeastern. In this study, leaf essential oil (EO) of L. gracilis was prepared using hydrodistillation. Followed by GC–MS analysis, its composition was characterized by the presence of thymol (55.50%), as major constituent. The effects of EO on cell proliferation and apoptosis induction were investigated in HepG2 cells. Furthermore, mice bearing Sarcoma 180 tumor cells were used to confirm its in vivo effectiveness. EO and its constituents (thymol, p-cymene, -terpinene and myrcene) displayed cytotoxicity to different tumor cell lines. EO treatment caused G1 arrest in HepG2 cells accompanied by the induction of DNA fragmentation without affecting cell membrane integrity. Cell morphology consistent with apoptosis and a remarkable activation of caspase-3 were also observed, suggesting induction of caspase-dependent apoptotic cell death. In vivo antitumor study showed tumor growth inhibition rates of 38.5–41.9%. In conclusion, the tested essential oil of L. gracilis leaves, which has thymol as its major constituent, possesses significant in vitro and in vivo antitumor activity. These data suggest that leaf essential oil of L. gracilis is a potential medicinal resource.