Biogenic hematite (α-Fe2O3) nanoparticles (NPs) of average size <10 nm were synthesized using green approach with Aloe vera extract (ALE). The aim of the study was to assess the protective effect of extracellular polymeric substances (EPS) against antibacterial and antibiofilm activities of ALE-α-Fe2O3NPs in normal EPS producers (pristine) and experimentally modified (low-EPS) Pseudomonas aeruginosa (P. aeruginosa) cells and the mechanism of cell killing. Formation of ALE-α-Fe2O3NPs has been validated by X-ray diffraction (XRD), transmission electron microscopy (TEM), scanning electron microscopy (SEM) and Fourier-transformed infrared spectroscopy (FTIR) analysis. The FTIR data suggested the possible role OH group bearing organic compounds of ALE in metal reduction and nucleation of NPs. Gas Chromatography-Mass spectroscopy (GC–MS) analysis revealed the presence of oxime-methoxy-phenyl, ethanone 1-phenyl, hexadecanoic acid, cyclohexanol 2,6-dimethyl, tetracontane, stigmast-5-en-3-ol, cyclohexanol 2,6-dimethyl, and cyclohexasiloxane dodecamethyl on the surface of ALE-α-Fe2O3NPs. Cell viability assay and SEM imaging revealed significantly greater bacteriostatic and/or bactericidal effect of ALE-α-Fe2O3NPs in low EPS cells compared to pristine cells or bare-α-Fe2O3NPs. This is attributed to thinner protective layer of EPS around the low EPS cells, and higher dispersibility and stability of ALE-α-Fe2O3NPs. Absorption of ALE-α-Fe2O3NPs and bare-α-Fe2O3NPs on EPS surface and within EPS matrix was ascertained by atomic absorption spectroscopy (AAS). The results suggest differential internalization of ALE-α-Fe2O3NPs and bare-α-Fe2O3NPs in P. aeruginosa cells. The flow cytometry (FCM) results exhibited increased intracellular granularity in low EPS (18.94%) as compared with pristine (10.94%) cells, which signifies the greater internalization of ALE-α-Fe2O3NPs. Moreover, the proportionate increase in intracellular ROS generation in low EPS (20.47%) via-a-vis pristine (7.56%) cells was observed. Overall, the results elucidate that ALE-α-Fe2O3NPs-bacterial interaction leads to attachment of NPs to EPS surface, migration within the EPS matrix and penetration into cell, which eventually results in growth inhibition due to intracellular ROS activity. Owing to significant antibacterial and antibiofilm activities, ALE-α-Fe2O3NPs may serve as a good candidate for clinical management of extended spectrum beta lactamases (ESBL) positive P. aeruginosa.