Neem oil is a naturally occurring pesticide found in seeds from the neem tree with a hundred-plus-year history of controling pests and diseases. The active ingredient in the oil is azadirachtin, which repels and kills pests. Neem oil is effective at any time during a season because it affects insects during all phases of their development. Neem oil is safe for the environment.so people often come to the conclusion that neem oil is ineffective. However once ingested by insects, Neem oil causes insects to reduce or cease feeding, can prevent larvae from maturing, reduces or interrupts mating behavior, and, in some cases, the oil coats the breathing holes of insects and kills them.