Background: Melaleuca alternifolia (tea tree) essential oil has been traditionally used in the ayurvedic system of medicine for healing burns, infections and seborrheic dermatitis. But yet, no controlled human study has determined its efficacy. Objective: The goal of the current study was to compare the efficacy of 5% tea tree essential oil (TTO) gel with placebo in the treatment of mild to moderate facial seborrheic dermatitis. Methods: Fifty four patients with mild to moderate facial seborrheic dermatitis reffered to Skin Diseases Research Center, in the Qazvin city, Iran, were randomly divided into two groups and treated with either 5% TTO gel or placebo three times daily for 4 weeks. The patients follow-ups were conducted in both groups after 2 and 4 weeks with evaluating of erythema, scaling, itching and greasy crusts. Results: Forty two patients completed the treatment course. There were significant differences between the TTO and placebo groups in the improvement of erythema, scaling, itching and greasy crusts (p < 0.05). Allergic side - effects were seen in neither group. Conclusions: 5% TTO gel is effective in the treatment of mild to moderate facial seborrheic dermatitis.