The effects of methyl jasmonate (MeJA) on the production of bioactive chemicals and gene expression in sweet basil were investigated. The total amount of phenolic compounds significantly increased in sweet basil after 0.5 mM MeJA treatment. Among the phenolic compounds, rosmarinic acid (RA) and caffeic acid (CA) were identified, and their amounts increased by 55 and 300%, respectively. The total amount of terpenoids also significantly increased after the same treatment. Particularly, eugenol and linalool increased by 56 and 43%, respectively. To better understand the signaling effect of MeJA on sweet basil, suppression subtractive hybridization (SSH) was used to identify the MeJA up-regulated genes. Among the 576 cDNA clones screened from the forward SSH cDNA library, 28 were found to be up-regulated by the MeJA treatment. Sequencing of these cDNA clones followed by BLAST searching revealed six unique transcripts displaying high similarities to the known enzymes and peptide, that is, lipoxygenase (LOX), cinnamic acid 4-hydroxylase (C4H), prephenate dehydrogenase (PDH), polyphenol oxidase (PPO), acid phosphatase (APase), and pentatricopeptide repeat (PPR), which play significant roles in the formation of secondary metabolites in sweet basil. Northern blot further confirmed the increased production at transcriptional level of LOX, C4H, PDH, PPO, PPR, and APase.