The objective of the project was to study salinity‐induced effects on essential oil, pigments and salts accumulation in sweet basil ( Ocimum basilicum , the cultivar Perrie) in relation to the alteration of plant morphological development and yield production. Hydroponically grown plants were exposed to one of six NaCl concentrations (1, 25, 50, 75, 100 and 130 mM NaCl). Inhibitory effects of salinity on biomass production of the shoot and the root, and area of individual leaves were apparent already under cultivation with 25 mM NaCl. Elevation of salinity from 1 to 100 mM NaCl induced 63% and 61% reductions in fresh and dry herb biomass production, respectively. The stress‐induced reduction of foliage biomass sourced mainly from inhibition of leaf area development rather than reduction of internode and leaf number. Cl and Na concentrations in the leaves, stems and roots increased with elevation of NaCl concentration in the cultivation solution. While the extent of Cl accumulation was leaves>stems>roots, Na was largely excluded from the leaves and was preferentially accumulated in roots and the stems, potentially accounting for the moderate sensitivity of the leaf tissue to salinity. Salt stress increased the contents of essential oil and carotenoids in the leaves that may further account for the moderate sensitivity of sweet basil to salinity and suggest a potential for agro‐industrial production. A twofold increase in both carotenoid concentration and the percent of essential oil in the fresh tissue was observed by elevation of the salinity from 1 to 130 mM NaCl. Overall, the stress induced increase of the percent of essential oil in the tissue in the salinity range 1–75 mM NaCl was about 50%, and thereby compensated for the similar reduction of biomass production in this salinity range, so that oil production on per plant basis was not reduced by salinity.