The paper explores fungal infection and aflatoxin B1 contamination of six medicinal plant samples viz. Adhatoda vasica Nees, Asparagus racemosus Linn., Evolvulus alsinoides Linn., Glycyrrhiza glabra Linn., Plumbago zeylanica Linn. and Terminalia chebula Retz. A total of 858 fungal isolates were detected from the raw materials. Maximum number of fungal isolates was detected from A. racemosus (228). The genus Aspergillus was found to be the most dominant genus causing infection to most of the raw materials. Among the 32 isolates of A. flavus tested, 13 isolates were found to be toxigenic elaborating aflatoxin B1. The highest elaboration of aflatoxin B1 was 394.95 ppb by the isolates of A. flavus from G. glabra. The essential oil of Cinnamomum camphora (L.) Presl showed efficacy in arresting aflatoxin B1 by the toxigenic strain. The growth of a toxigenic strain of A. flavus decreased progressively with increasing concentration of essential oil from leaves of C. camphora. The oil completely inhibited aflatoxin B1 production even at 750 ppm. Hence, the oil of C. camphora is recommended as herbal fungitoxicant against the fungal contamination of the raw materials.