Remove flowers with stem tips when they are in full bloom, when petals are beginning to turn back from the center, and allow them to dry. If the flowers are infested with insects (a common problem), spread the flower heads on a baking tray and bake at about 60 C or 150 Ffor 30 minutes, then sift carefully through a colander.
Alternate method: Pull the entire flowering plant at full flower and cut off the root and any brown parts. Tie bundles of the plant and put them into large paper bags with the flowers pointed downwards. Cut air vents in the sides of the bags, but make sure to keep the bottoms whole. Hang up to dry. After about a week they should be dry, give the bag a shake or two to knock loose any flowers still attached or caught in the bundles. When the plant has dried, the flowers fall out in the bottom of the bag and can be collected. (source: Kitchen Witch)
Chamomile teas, ointments, and extracts all start with the white and yellow flower head. The flower heads may be dried and used in teas or capsules or crushed and steamed to produce a blue oil, which has medicinal benefits. The oil contains ingredients that reduce swelling and may limit the growth of bacteria, viruses, and fungi. (source: University of Maryland Medical Center)