Terpenoids represent the largest class of natural products with a diverse array of structures and functions. Many terpenoids have reported therapeutic properties such as antimicrobial, anti-inflammatory, immunomodulatory and chemotherapeutic properties making them of great interest in the medical field. Also, they are widely used in the flavors and fragrances industries, in addition to being a source of biofuels. Terpenoids suffer from low natural yields and complicated chemical synthesis, hence the need for a more sustainable production method. Metabolic engineering provide an excellent opportunity to construct microbial cell factories producing the desired terpenoids. The biosynthetic mevalonate and non-mevalonate pathways involved in the production of terpenoid precursors are fully characterized so exploring methods to improve their flux would be the first step in creating a successful cell factory. The complexity and diversity of terpenoid structures depends mainly on the action of the terpene synthases responsible for their synthesis. These enzymes are classified into different classes and gaining insight into their catalytic mechanism will be useful in designing approaches to improve terpenoid production. This review focuses on the biosynthesis and biodiversity of terpenoids, understanding the terpene synthase enzyme family involved in their synthesis and the engineering efforts to create microbial cell factories for terpenoid production.