Lavender does repel mice. Lavender oil also repels mice, as do the dried herbs themselves. Lavender plants grown around the house can also serve as a deterrent.
Lavender is only one of the natural ways to keep mice out of a home. Other plants that repel mice include mint, camphor, garlic and allium. Some less strongly scented plants have the same effect, including holly, grape hyacinths and daffodils. Mice like to stay in tall grass and in the mulch in the garden, so keeping a lawn mowed and mulch from getting too thick is another natural way to reduce mice.