Antibacterial effect of modified sago starch-alginate edible film incorporating lemongrass oil at various concentrations was studied. Edible films were prepared from a mixture of modified sago starch and alginate. Lemongrass oil (0.1 - 0.4%, v/w) and glycerol (0 and 20%, w/w) were incorporated in the films to act as natural antimicrobial agent and plasticizer, respectively. The films were characterized for antibacterial activity against food pathogenic bacteria such as Escherichia coli O157:H7, Salmonella Enteritidis and Staphylococcus aureus. The edible film exhibited antibacterial activity against Escherichia coli O157:H7 and Salmonella Enteritidis by using agar diffusion assay method. For films tested against Escherichia coli O157:H7, the zone of inhibition increased significantly (p < 0.05) with addition of lemongrass oil at all levels both in the presence and absence of glycerol. The films also significantly (p < 0.05) inhibited the growth of Salmonella enteritidis only with 0.4% lemongrass oil (in the presence and absence of glycerol). However, the films containing lemongrass oil did not show any inhibition effect on Staphylococcus aureus.