Lemon balm is often used as a flavoring in ice cream and herbal teas, both hot and iced, often in combination with other herbs such as spearmint. It is also frequently paired with fruit dishes or candies. It can be used in fish dishes and is the key ingredient in lemon balm pesto. It has been suggested that it might be a better, healthier preservative than beta hydroxy acid in sausages

The crushed leaves, when rubbed on the skin, are used as a repellant for mosquitos.

Lemon balm is also used medicinally as a herbal tea, or in extract form. It is claimed to have antibacterial and antiviral properties (it is effective against herpes simplex).

It is also used as an anxiolytic, mild sedative or calming agent. At least one study has found it to be effective at reducing stress, although the study's authors call for further research. Lemon balm extract was identified as a potent inhibitor of GABA transaminase, which explains anxiolytic effects. The major compound responsible for GABA transaminase inhibition activity in lemon balm is rosmarinic acid.

Lemon balm and preparations thereof also have been shown to improve mood and mental performance. These effects are believed to involve muscarinic and nicotinic acetylcholine receptors. Positive results have been achieved in a small clinical trial involving Alzheimer patients with mild to moderate symptoms.

Its antibacterial properties have also been demonstrated scientifically, although they are markedly weaker than those from a number of other plants studied. The extract of lemon balm was also found to have exceptionally high antioxidant activity.