Fragrance is an integral part of cosmetic products and is often regarded as an overriding factor in the selection of cosmetics among consumers. Fragrances also play a considerable role in masking undesirable smells arising from fatty acids, oils and surfactants that are commonly used in cosmetic formulations. Essential oils are vital assets in the cosmetic industry, as along with imparting pleasant aromas in different products, they are able to act as preservatives and active agents and, simultaneously, offer various benefits to the skin. Moreover, the stimulating demand for natural ingredients has contributed massively to a renewed interest in cosmetic and wellness industries in plant derivatives, especially essential oils. This has led popular cosmetic companies to endorse natural fragrances and opt for minimally processed natural ingredients, given the potentially adverse health risks associated with artificial fragrance chemicals, which are major elements of cosmetics. Among the high-valued essential oils used as fragrances are citrus, lavender, eucalyptus, tea tree and other floral oils, among others, while linalool, geraniol, limonene, citronellol, and citral are much-appreciated fragrance components used in different cosmetics. Thus, this review aimed to highlight the enormous versatility of essential oils as significant sources of natural fragrances in cosmetics and cosmeceuticals. Moreover, a special focus will be laid on the different aspects related to essential oils such as their sources, market demand, chemistry, fragrance classification, aroma profile, authenticity and safety.