If you want to add peppermint flavor to desserts or homemade candy, or use peppermint for aromatherapy, you have a choice of ingredients: peppermint oil or peppermint extract. The fundamental difference is that peppermint oil is made of pure peppermint, while peppermint extract is essentially a flavored solution–a little peppermint and a lot of something else.
Peppermint oil is the pure, concentrated oil–known as an essential oil–derived from the stems and leaves of the peppermint plant. Peppermint oil producers get it through steam distillation, in which they expose the plant to high temperature, high-pressure steam. The heat and steam cause the oil to evaporate out of the plant. When the resulting vapor–a mixture of steam and oil–cools and condenses, the pure oil can be separated out and collected. Peppermint oil gets its zip from menthol.
An extract is a mixture of an essential oil and a medium–usually alcohol–that helps carry the flavor. You can make peppermint oil either by soaking peppermint leaves and stems in alcohol and allowing the alcohol to absorb oil–”extracting” the flavor from the plant–or by diluting peppermint oil with alcohol. Either way, the finished product is mostly peppermint-flavored alcohol.