Terpenes constitute the largest class of plant secondary (or specialized) metabolites, which are compounds of ecological function in plant defense or the attraction of beneficial organisms. Using biochemical and genetic approaches, nearly all Arabidopsis thaliana (Arabidopsis) enzymes of the core biosynthetic pathways producing the 5-carbon building blocks of terpenes have been characterized and closer insight has been gained into the transcriptional and posttranscriptional/translational mechanisms regulating these pathways. The biochemical function of most prenyltransferases, the downstream enzymes that condense the C₅-precursors into central 10-, 15-, and 20-carbon prenyldiphosphate intermediates, has been described, although the function of several isoforms of C₂₀-prenyltranferases is not well understood. Prenyl diphosphates are converted to a variety of C₁₀-, C₁₅-, and C₂₀-terpene products by enzymes of the terpene synthase (TPS) family. Genomic organization of the 32 Arabidopsis TPS genes indicates a species-specific divergence of terpene synthases with tissue- and cell-type specific expression profiles that may have emerged under selection pressures by different organisms. Pseudogenization, differential expression, and subcellular segregation of TPS genes and enzymes contribute to the natural variation of terpene biosynthesis among Arabidopsis accessions (ecotypes) and species. Arabidopsis will remain an important model to investigate the metabolic organization and molecular regulatory networks of terpene specialized metabolism in relation to the biological activities of terpenes.