Terpenoids are a diverse class of natural products that have many functions in the plant kingdom and in human health and nutrition. Their chemical diversity has led to the discovery of over 40,000 different structures, with several classes serving as important pharmaceutical agents, including the anticancer agents paclitaxel (Taxol) and terpenoid-derived indole alkaloids. Many terpenoid compounds are found in low yield from natural sources, so plant cell cultures have been investigated as an alternate production strategy. Metabolic engineering of whole plants and plant cell cultures is an effective tool to both increase terpenoid yield and alter terpenoid distribution for desired properties such as enhanced flavor, fragrance or color. Recent advances in defining terpenoid metabolic pathways, particularly in secondary metabolism, enhanced knowledge concerning regulation of terpenoid accumulation, and application of emerging plant systems biology approaches, have enabled metabolic engineering of terpenoid production. This paper reviews the current state of knowledge of terpenoid metabolism, with a special focus on production of important pharmaceutically active secondary metabolic terpenoids in plant cell cultures. Strategies for defining pathways and uncovering rate-influencing steps in global metabolism, and applying this information for successful terpenoid metabolic engineering, are emphasized.