Terpenoids are natural compounds predominantly present in plants. They have many pharmaceutical and/or nutritional functions, and have been widely applied in medical, food, and cosmetics industries. Recently, terpenoids have been used in the clinical treatment of COVID-19 due to the good antiviral activities. The increasing demand for terpenoids in international markets poses a serious threat to many plant species. For environmentally sustainable development, microbial cell factories have been utilized as the promising platform to produce terpenoids. Nevertheless, the bioproduction of most terpenoids cannot meet commercial requirements due to the low cost-benefit ratio until now. The biosynthetic potential of endophytes has gained attention in recent decades owing to the continual discovery of endophytes capable of synthesizing plant bioactive compounds. Accordingly, endophytes could be alternative sources of terpenoid-producing strains or terpenoid synthetic genes. In this review, we summarized the research progress describing the main and supporting roles of endophytes in terpenoid biosynthesis and biotransformation, and discussed the current problems and challenges which may prevent the further exploitation. This review will improve our understanding of endophyte resources for terpenoid production in industry in the future.