The usage of essential oils as such or of volatile fractions thereof is widespread in the flavor and fragrance industry to aromatize perfumery and cosmetic products, foodstuffs, and many household and pharmaceutical products. The increased market share of convenience food together with consumers' request for constant high quality and natural products have established a lasting increase in the demand for natural flavorings that cannot be satisfied by the traditional plant materials. This review summarizes selected work on terpene bioconversion/transformation and focuses on recently published papers dealing with novel strains and products, high product yields, intriguing genetic engineering approaches, and integrated bioprocesses. The future perspectives of an industrial realization of a biotechnological production of terpene-derived natural flavors are critically evaluated.