Abstract Background Achillea fragrantissima (F. Asteraceae) is traditionally used to treat skin infections and inflammation. The present work intended to prepare essential oils (EOs) from A. fragrantissima aerial parts growing widely in Egypt and investigate its antibacterial activity against skin-related pathogens and in vitro cell-based anti-inflammatory activity. Methods EOs of the fresh aerial parts were extracted by hydrodistillation (HD), microwave-assisted hydrodistillation (MAHD), and head-space (HS), while those of the dried ones were prepared by supercritical fluid (SF). The result EOs were analyzed using GC/MS. The antibacterial activity was evaluated alongside Pseudomonas aeruginosa ATCC 9027, Escherichia coli ATCC 8739, Staphylococcus aureus ATCC 25923, Streptococcus pyogenes ATCC 12344, Clostridium perfringens ATCC 13124 by agar diffusion, microwell dilution, and biofilm formation tests. The anti-inflammatory activity was evaluated by measuring tumor necrosis factor-alpha (TNF-α), interleukin 2 (IL-2), and 6 (IL-6) in lipopolysaccharides (LPS)- stimulated RAW 264.7 cells using ELISA assays in addition, expression of nitric oxide synthase (iNOS) was measured via western blot. Results The SF method gave the highest EO yield (1.50 mL v/w). Oxygenated components constituted the highest percentage in the four methods, 84.14, 79.21, 73.29 and 33.57% in the HS, HD, MAHD, and SF, respectively. Moreover, variation in the amount of identified compounds was apparent; in HS EO α-thujone (29.37%), artemisia ketone (19.59%), and santolina alcohol (14.66%) are major components, while α-thujone (20.38%) and piperatone (12.09%) were significant in HD. Moreover, ( +)-spathulenol (12.22%) and piperatone (10.48%) were significant in MAHD, while piperatone (14.83%) and β-sitosterol (11.07%) were significant in SF EO. HD, MAHD, and SF EOs exhibited susceptibility against P. aeruginosa (IZ = 9–14 mm), E. coli (11–13 mm), and C. perfringens (IZ = 10–14 mm) in agar diffusion assay. MAHD EOs demonstrated potent growth inhibition (MICs = 0.25–2 mg/mL), followed by HD EOs (MICs = 13–52 mg/mL) to all tested microorganisms in well microdilution assay. Also, they exert MBC values equal to or higher than the MICs. Furthermore, SF EOs inhibited the biofilm formation of all tested microorganisms by 65.12—80.84%. Specifically, MAHD and HD EOs efficiently suppress the biofilm of S. pyogenes (77.87%) and P. aeruginosa (60. 29%), respectively. Ultimately, HD and SF EOs showed anti-inflammatory activity by suppressing the TNF-α, IL-2, and IL-6 release and iNOS expression in LPS-stimulated RAW 264.7 macrophages. Conclusion A. fragrantissima EO is rich in oxygenated volatile compounds with antibacterial and anti-inflammatory activities. It is encouraged as a bioactive agent for adjusting skin infections, though additional studies are essential for their safety in clinical settings.