Among plant secondary metabolites, terpenoids are the most abundant and structurally diverse group. In addition to their important roles in pollinator attraction and direct and indirect plant defense, terpenoids are also commercially valuable due to their broad applications in the cosmetic, food, and pharmaceutical industries. Because of their functional versatility and wide distribution, great efforts have been made to decipher terpenoid biosynthetic pathways, to investigate the molecular mechanism determining their structural diversity, and to understand their biosynthetic regulation. Recent progress on the manipulation of terpenoid production in transgenic plants not only holds considerable promise for improving various plant traits and crop protection but also increases our understanding of the significance of terpenoid metabolites in mediating plant-environment interactions.