The proliferation of foodborne pathogens amplifies concerns over food safety and environmental sustainability, posing significant risks to human health and necessitating eco-friendly packaging solutions. Herein, novel antimicrobial, biodegradable films were developed from methylcellulose (MC), psyllium husk (PH) and Ocimum tenuiflorum essential oil (OEO). The MC-PH/OEOx (x = 0, 2.5, 5.0, 7.5%) films were analyzed using spectral, optical, morphological, and mechanical techniques. Fourier transform infrared spectroscopy confirmed molecular interactions between OEO and the MC-PH/OEO0 films. Mechanical analysis showed that higher OEO concentrations increased elongation at the break while reducing tensile strength and Young’s modulus, thereby enhancing film flexibility. Additionally, OEO reduced water vapor permeability and moisture content, significantly improving barrier properties. The MC-PH/OEO7.5% film significantly inhibited Escherichia coli growth, displayed robust antifungal activity, and exhibited potent antioxidant capabilities due to OEO bioactivity. These enhanced physical and biological improvements render MC-PH with OEO a promising, sustainable, and natural solution for food packaging applications.