Precise nitrogen (N) supply is an agronomic practice of crucial importance to achieve optimal crop performance without compromising product quality. However, excessive use of synthetic N fertilizers may have deleterious effects on both agroecosystem and human health. Thus, the development and use of strategies aiming to ameliorate the losses caused by water constraints and N deficiency are essential for fostering resilient and sustainable agroecosystems. In this regard, the impact of three drought stress levels (DS) [100%, 80% and 60% of the field capacity (FC)] in combination with four N supply rates (0, 50, 100 and 150 kg ha−1) on sweet basil cultivated in a protected environment was investigated. The interactive biostimulatory action of Kelpstar® seaweed extract (SWE) and Tyson® protein hydrolysate (PH) was also explored. The study focused on the effects of these treatments on yield, physiological attributes, functional traits, and volatile compounds profile. Drought stress led to a reduction in yield by 12.5% and 21.1% under irrigation at 80% and 60% FC, respectively, compared to well-watered plots (100% FC). Furthermore, drought stress levels linearly decreased total leaf area (-15.4% and -26.2% for DS80 and DS60, respectively), stomatal conductance (-14.2% and 34.1% for DS80 and DS60, respectively), nitrogen use efficiency (NUE) (4.0% and 10.0% for DS80 and DS60, respectively), and volatile compounds, such as trans-2-hexanal, 1-octen-3-ol and α-bergamotene. Conversely, an increase in N application rate positively influenced yield (8.6% and 12.2% for N100 and N150, respectively), total leaf area (22.2% and 16.5% for N100 and N150, respectively), specific leaf area (SLA), total chlorophyll (7.7% for N150), nitrate content, and the presence of specific volatile compounds, such as 1-octen-3-ol and α-bergamotene, when compared to no N application. Seaweed extract application caused an upsurge in yield (+17.5%), stomatal conductance (+25.8%), WP (+13.5%), total chlorophyll (+2.3%), nitrate (+3.4%), phenolics (+14.2), ascorbic acid (+28.2), as well as, 1-octen-3-ol, β-cis-ocimene, linalool and eugenol, compared to the control. Similarly, plant protein hydrolysate increased yield (+16.1), stomatal conductance (+10.4), WP (+13.7), total chlorophyll (+4.3), phenolics (+10.7%), ascorbic acid (+9.7%), β-cis-ocimene and eugenol, compared to the control. Notably, the increased yield, improved quality, and enchanced physiological traits observed after biostimulant application, especially under drought stress or N deficiency conditions, underscore the potential role of biostimulants in increasing resilience of basil plants. Thus, the foliar application of SWE and PH offer a valuable strategy for enhancing plant yield and quality under sub-optimal conditions, while simultaneously enhancing water and N use efficiency.