Exploring the potential of iron/iron oxide nanoparticles (IONPs) to act as fertilizer is an area of immense interest. This paper reports the green synthesis of IONPs using aqueous extract of Ocimum gratissimum leaves and its characterization with XRD, HRTEM and FTIR. This environmentally benign route avoids hazardous and toxic chemicals commonly employed in nanoparticle synthesis. The IONPs formed (Fe2O3) are stabilized by the phenolic and aromatic compounds found in the aqueous extract of Ocimum gratissimum and are of small crystallite size (5–30 nm). Peanut seedlings treated with these IONPs exhibited a superior growth performance at lower application rates (100 mg L−1), as evidenced by better growth parameters, which also corroborated with gibberellic acid accumulation in a dose-dependent manner. The differential activity of green synthesized IONPs, highlighted in this study, compared to already reported chemically synthesized IONPs, reveals their functional superiority.