The study was conducted to determine the effects of stocking density (SD, 5 or 7 layers/cage) and tarragon (Artemisia dracunculus L.) diet supplementation at four levels (0, 1.2, 6 and 12 g/kg feed) on performance, certain egg characteristics, serum, liver, egg yolk and small intestine bacteria parameters in laying hens. The experiment was carried out over a period of 8 weeks, with 192 Lohman Brown commercial hybrids at 50-w-age. The results showed that an increased SD reduced feed intake (FI; p<0.01) and egg production (p<0.05), but had no effect on the weight gain, feed conversion ratio, damaged egg ratio, egg weight and egg quality (p>0.05) parameters. The supplementation of tarragon to the diet reduced the FI and damaged egg ratio (p<0.01), and improved egg production and FCR (p<0.01). While an increased SD reduced serum total antioxidants (p<0.05), it elevated corticosterone (CORT) and total oxidant serum (TOS) (p<0.05). Tarragon was found to enhance total immunoglobulin (p<0.05), but to decreased the CORT and TOS of the serum (p<0.05). An increased SD raised the malondialdehyde (MDA) in the serum (p<0.001), liver (p<0.05) and yolk (p<0.001). Tarragon supplementation reduced MDA of the serum (p<0.05), liver (p<0.001) and yolk (p<0.001). E. coli and total Mesophilic Aerobic Bacteria counts in the small intestine were raised (p<0.001) with increased SD. Tarragon decreased (p<0.05) mesophilic aerobic bacteria. It was thus found that, tarragon supplementation can be considered generally effective in improving performance parameters, alleviating stress-induced negativities, reducing lipid peroxidation, regulating the immune system and controlling some intestinal microorganisms.