If you want to add peppermint flavor to desserts or homemade candy, or use peppermint for aromatherapy, you have a choice of ingredients: peppermint oil or peppermint extract. The fundamental difference is that peppermint oil is made of pure peppermint, while peppermint extract is essentially a flavored solution--a little peppermint and a lot of something else.
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Peppermint oil is the pure, concentrated oil--known as an essential oil--derived from the stems and leaves of the peppermint plant. Peppermint oil producers get it through steam distillation, in which they expose the plant to high temperature, high-pressure steam. The heat and steam cause the oil to evaporate out of the plant. When the resulting vapor--a mixture of steam and oil--cools and condenses, the pure oil can be separated out and collected. Peppermint oil gets its zip from menthol.
An extract is a mixture of an essential oil and a medium--usually alcohol--that helps carry the flavor. You can make peppermint oil either by soaking peppermint leaves and stems in alcohol and allowing the alcohol to absorb oil--"extracting" the flavor from the plant--or by diluting peppermint oil with alcohol. Either way, the finished product is mostly peppermint-flavored alcohol.
The flavor of peppermint oil is much more intense and concentrated than that of extract. According to The Cook's Thesaurus, you'd need to use four times as much extract as peppermint oil to get the same effect in a recipe. Pure peppermint oil is so concentrated, in fact, that the menthol can cause a rash if left on the skin.
Peppermint oil and peppermint extract are both used in cooking. The advantage of using oil over extract is that alcohol quickly evaporates when heated. When the alcohol in the extract burns off, so does a lot of the peppermint flavor. Peppermint oil stays intact in the heat. Peppermint oil is more expensive, however.
Peppermint oil also has medicinal uses. According to the University of Maryland Medical Center, or UMMC, it can be an effective treatment for indigestion, flatulence and irritable bowel syndrome. Creams or ointments that include peppermint oil--with a menthol concentration of no more than 16 percent--can be effective topical analgesics, providing itch relief and soothing irritations such as hives and poison ivy.
Never ingest pure peppermint oil, which can be toxic in large doses. The UMMC says the most effective way to take peppermint oil for gastrointestinal problems is in the form of enteric-coated capsules. Never give peppermint oil in any amount to small children. The UMMC also says pregnant and nursing women should avoid it.