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Plai or cassumunar ginger ( Zingiber montanum ), mainly distributed in tropical Asia, is an essential oil-bearing rhizomatous crop belonging to the Zingiberaceae family. Rhizomes and essential oil of this herb are used in culinary as flavoring agents, traditional medicines, and aromatherapy. In this study, the effect of different postharvest drying methods (air-, oven-drying at 40 and 60 °C, sun-, microwave-, and freeze-drying) of its sliced rhizome on the essential oil yield, composition, and sensory quality was investigated. The major key odorants and phytotoxins in its essential oil were identified for the first time through sensory- or bioassay-guided fractionation. Although the drying methods did not alter the oil composition significantly, oven-drying at 40 °C and freeze-drying produced the highest oil yield (81.0% of fresh rhizome) while maintaining the sensory quality. 4-Terpineol was found to be the majorly abundant key odorant in its oil through detailed sensory analysis. This oxygenated monoterpene was also demonstrated to be the major phytotoxin negatively affecting seed germination and shoot and root growth of wheatgrass seeds with IC 50 values of 0.67, 0.10, and 0.17 mM, respectively. The current study is beneficial for further value addition of this crop in food industries and the agricultural sector.