In this study, we investigated the effects of the dietary addition of lavender essential oil (LEO) on mitigating the adverse effects of high stocking densities (HSD) in the Nile tilapia, Oreochromis niloticus. We used 216 fingerlings and randomly distributed them according to a 2 × 3 factorial design, comprising two stocking densities: a low stocking density (LSD, 2.92 kg/m3) and a high stocking density (5.85 kg/m3) and three levels of LEO, 0, 0.5%, and 1%, for 70 days. We evaluated their growth, digestive enzyme activity, blood biochemical parameters, immune/antioxidant indices, and intestinal morphology. All fish were intraperitoneally inoculated with Aeromonas veronii for a bacterial challenge test at the end of the feeding trial and monitored for 14 days. After 14 days, head kidney samples were collected from all fish to assess the level of expression of immune-related and apoptosis-related genes. Additionally, tissue samples were collected from the liver, kidney, and intestine to investigate the immunohistochemistry and histopathological alterations. The results showed that the final body weight and weight gain were lower and the feed conversion ratio was higher in fish cultured under HSD compared to those cultured under LSD. The fish cultured under LSD and HSD had higher final body weight when administered dietary LEO compared to the fish that were fed the non-supplemented diet. Adding 1% LEO increased the intestinal villus height and muscular coat thickness (MT). The MT was lower in fish cultured under HSD compared to those cultured under LSD. The amylase and lipase activities were lower in the fish cultured under HSD than in those cultured under LSD. However, LEO addition increased the lipase activity in fish cultured under LSD and HSD. Fish cultured under HSD showed lower immune/antioxidant indices (lysozymes, nitric oxide, complement 3, catalase, superoxide dismutase, and glutathione-S transferase) than those cultured under LSD. However, LEO addition significantly increased the immune response and antioxidant activity in fish cultured under LSD and HSD (P < 0.01). The level of expression of the IL-1β, IL-6, IL-8, NF-kB, and TLR-4 genes was upregulated in the LSD + LEO1, LSD + LEO0.5, and HSD + LEO1 groups. The expression of TGF-β and IL-10 was upregulated in fish that received 1% and 0.5% LEO, irrespective of whether they were cultured under LSD or HSD. The level of expression of apoptosis-related genes (caspase 3 and BAX) was upregulated in the HSD + LEO0 group and modified by the addition of LEO in their diet. The immunoexpression of NF-kB and IL-1β after bacterial challenge increased in the tissues of fish cultured under LSD and HSD after LEO was administered. These results indicated that the dietary addition of 1% LEO mitigated the harmful effects of HSD on the growth, immunity, antioxidant activity, and disease resistance of the Nile tilapia.