Magnolia grandiflora (Magnoliaceae) is an evergreen tree with fragrant and showy flowers native to southeastern USA but widely cultivated all over the world and used in cosmetics industry in treatment of skin diseases. Here, we report on the chemical analysis of the essential oil obtained from flowers of plants cultivated in Iran, together with the evaluation of its antioxidant and cytotoxic activities. The essential oil composition was dominated by bioactive sesquiterpenes, namely β- elemene, bicyclogermacrene, germacrene D and (E)-caryophyllene. The oil exhibited moderate radical scavenging activity towards the ABTS⋅+ radical, and mild non-selective inhibitory effects against A375, MDA-MB 231 and T98 G tumour cell lines. The latter were influenced by the presence of the anticancer β-elemene. These results provided new insights for potential application of M. grandiflora volatile oil in the pharmaceutical and cosmetics industry where only the nonvolatile magnolol and honokiol have hitherto been fully exploited.