Also known as melaleuca, from the name of its native Australian plant source, Melaleuca alternifolia. It has disinfecting properties that have been shown to be effective against the bacteria that cause acne. Tea tree oil also has anti-inflammatory properties and is an antioxidant. 
Tea tree oil has some interesting research demonstrating it to be an effective antimicrobial agent. The Journal of Applied Microbiology stated, “The essential oil of Melaleuca alternifolia (tea tree) exhibits broad-spectrum antimicrobial activity. Its mode of action against the Gram-negative bacterium Escherichia coli AG100, the Gram-positive bacterium Staphylococcus aureus NCTC 8325, and the yeast Candida albicans has been investigated using a range of methods. The ability of tea tree oil to disrupt the permeability barrier of cell membrane structures and the accompanying loss of chemiosmotic control is the most likely source of its lethal action at minimum inhibitory levels.” 
In addition, in a randomized, placebo-controlled pilot study of tea tree oil in the treatment of herpes cold sores, tea tree oil was found to have similar degree of activity as 5% acyclovir. 
For acne there’s also some credible published information showing it to be effective as a topical disinfectant for killing the bacteria that can cause pimples.  However, the crux of the matter for tea tree oil is: How much is needed to have an effect?
The Medical Journal of Australia compared the efficacy of tea tree oil to the efficacy of benzoyl peroxide for the treatment of acne. A study of 119 patients using 5% tea tree oil in a gel base versus 5% benzoyl peroxide lotion was discussed. There were 61 subjects in the benzoyl peroxide group and 58 in the tea tree oil group. The conclusion was that “both treatments were effective in reducing the number of inflamed lesions throughout the trial, with a significantly better result for benzoyl peroxide when compared to the tea tree oil. Skin oiliness was lessened significantly in the benzoyl peroxide group versus the tea tree oil group.” However, while the reduction of breakouts was greater for the benzoyl peroxide group, the side effects of dryness, stinging, and burning were also greater—“79% of the benzoyl peroxide group versus 49% of the tea tree oil group.” 
For acne, tea tree oil concentrations of 5% to 10% are recommended. However, the amount present in most skincare products is usually less than 1%; therefore, it is not considered effective for disinfecting. Note that tea tree oil is a fragrant oil whose volatile components of limonene and eucalyptol can cause contact dermatitis on exposure to oxygen. Careful use and storage of tea tree oil is advised. [6,7]
- Pazyar N, Yaghoobi R, Bagherani N, Kazerouni A. A review of applications of tea tree oil in dermatology. Int J Dermatol.. 2013;52(7):784-90.
- Cox S, Mann C, Markham J, Bell H, Gustafson J, Warmington J, Wyllie S. The mode of antimicrobial action of the essential oil of Melaleuca alternifolia (tea tree oil). J Appl Microbiol.. 2000;88(1):170-5.
- Carson C, Ashton L, Dry L, Smith D, Riley T. Melaleuca alternifolia (tea tree) oil gel (6%) for the treatment of recurrent herpes labialis. J Antimicrob Chemother.. 2001;48(3):450-1.
- Raman A, Weir U, Bloomfield S. Antimicrobial effects of tea-tree oil and its major components on Staphylococcus aureus; Staph. epidermidis and Propionibacterium acnes. Lett Appl Microbiol. 1995;21(4):242-5.
- Bassett I, Pannowitz D, Barnetson R. A comparative study of tea-tree oil versus benzoyl peroxide in the treatment of acne. Med J Aust. 1990;153(8):455-8.
- D’Arrigo M, Ginestra G, Mandalari G, Furneri P, Bisignano G. Synergism and postantibiotic effect of tobramycin and Melaleuca alternifolia (tea tree) oil against Staphylococcus aureus and Escherichia coli. Phytomedicine.. 2010;17(5):317-22.
- Zug K, Warshaw E, Fowler Jr J, Maibach H, Belsito D, Pratt M, Sasseville D, Storrs F, Taylor J, Mathias C, et al. Patch-test results of the North American Contact Dermatitis Group 2005-2006. Dermatitis.. 2009;20(3):149-60.