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Though this ingredient works well with most skin types, some people with sensitive skin may experience a reaction such as allergic rashes, closed comedones, or itchiness.

Terpinen-4-ol is responsible for tea tree oil's broad-spectrum antimicrobial activity and makes it a well-researched option for acne.

Clinical studies support 5% tea tree oil as an effective topical treatment for mild to moderate acne. A study with 124 patients compared 5% tea tree oil gel to 5% benzoyl peroxide and both reduced acne (though tea tree oil worked more slowly).

Besides acne, it is also seen in anti-dandruff shampoos and scalp treatments for it's antimicrobial and anti-seborrheic properties.

Safety-wise, the allergic potential of low concentrations on healthy skin is considered low. However, oxidized (old or improperly stored) tea tree oil is a stronger sensitizer.

Irritation can also occur if using the undiluted oil on skin; it's best to use this ingredient as part of a carefully crafted cosmetic formula. This is because regulations require tea tree oil in cosmetics to be stabilized to prevent degradation.

This ingredient has been deemed safe up to 2% in shampoo, 1% in cleansers, and 0.1% in face cream by the EU's Scientific Committee on Consumer Safety (SCCS).

There is some lab evidence that tea tree oil is antifungal against Malassezia, but it is a supportive option at best and not a replacement for proven antifungal treatments.