Ocimum sanctum essential oil was evaluated for its antimicrobial activity to use it as natural preservative for fermented dairy products against food borne pathogens and its compatibility with starter cultures. Antimicrobial potential was evaluated by disc and agar well assay along with determination of its minimal inhibitory concentration (MIC). Disc and agar well assay revealed maximum inhibition of pathogens as compared to starter cultures. Concentration range of 0.1-2.0 µL mL^-1 was used to test MIC of all target microorganisms. Concentrations of 0.4-0.6 µL mL^-1 was effective in inhibiting the growth of above pathogens microorganisms whereas 3-4 times higher concentration i.e. 1.8 µL mL^-1 was required for bacteriostatic action against dairy starter cultures indicating its compatibility in broth. The compatibility of dairy cultures with 0.1-2.0 µL mL^-1 concentration of essential oil were also determined in milk matrix (as dahi and yoghurt fermented product model) by measuring change in pH, titratable acidity and curd setting time. Concentration of 0.5-1.0 µL mL^-1 of Ocimum sanctum essential oil was found to be safe which can be directly used for preservation purpose without affecting starter cultures activity vis-a-vis quality of fermented products.