This paper summarizes the current knowledge regarding the possible modes of action and nutritional factors involved in the use of essential oils (EOs) for swine and poultry. EOs have recently attracted increased interest as feed additives to be fed to swine and poultry, possibly replacing the use of antibiotic growth promoters which have been prohibited in the European Union since 2006. In general, EOs enhance the production of digestive secretions and nutrient absorption, reduce pathogenic stress in the gut, exert antioxidant properties and reinforce the animal’s immune status, which help to explain the enhanced performance observed in swine and poultry. However, the mechanisms involved in causing this growth promotion are far from being elucidated, since data on the complex gut ecosystem, gut function, in vivo oxidative status and immune system are still lacking. In addition, limited information is available regarding the interaction between EOs and feed ingredients or other feed additives (especially pro- or prebiotics and organic acids). This knowledge may help feed formulators to better utilize EOs when they formulate diets for poultry and swine.