From http://en.wikipedia.org/wiki/Neem_oil

Neem oil is not used for cooking purposes but, in India and Bangladesh, it is used for preparing cosmetics (soap, hair products, body hygiene creams, hand creams) and in Ayurvedic, Unani
and folklore traditional medicine, in the treatment of a wide range of
afflictions. The most frequently reported indications in ancient
Ayurvedic writings are skin diseases, inflammations and fevers, and
more recently rheumatic disorders, insect repellent and insecticide effects.

Traditional Ayurvedic uses of neem include the treatment of fever, leprosy, malaria, ophthalmia and tuberculosis. Various folk remedies for neem include use as an anthelmintic, antifeedant, antiseptic, diuretic, emmenagogue, contraceptive, febrifuge, parasiticide, pediculocide and insecticide. It has been used in traditional medicine for the treatment of tetanus, urticaria, eczema, scrofula and erysipelas.
Traditional routes of administration of neem extracts included oral,
vaginal and topical use. Neem oil has an extensive history of human use
in India and surrounding regions for a variety of therapeutic purposes.
Puri (1999) has given an account of traditional uses and therapeutic
indications and pharmacological studies of this oil, in his book on neem.

Formulations made of Neem oil also find wide usage as a
bio-pesticide for organic farming, as it repels a wide variety of pests
including the mealy bug, beet armyworm, aphids, the cabbage worm, nematodes and the Japanese beetle. Neem Oil is not known to be harmful to mammals and birds as well as many beneficial insects such as honeybees and ladybugs.
It can be used as a household pesticide for ant, bedbug, cockroach,
housefly, sand fly, snail, termite and mosquitoes both as repellent and
larvicide (Puri 1999). Neem oil also controls black spot, powdery mildew, anthracnose and rust (fungus).

For use as a bio-pesticide, pure Neem oil should be diluted at the
rate of 1 teaspoon per quart or 4 teaspoons per gallon of water. Adding
a surfactant greatly enhances its effectiveness. It can also be used as a cure for Static Lice in Cavies (Guinea Pigs).