Fungi produce a myriad of terpenoids with a broad range of biological activities, many of which can be adapted to human use. This requires knowledge of the enzymes responsible for the biosynthesis of these compounds. Herein, we describe strategies for identification and characterization of putative biosynthetic genes, structural examination of important pathway enzymes with a focus on altering activity, and identification of biosynthetic clusters, and genome mining for yet-to-be-discovered pathways. Fungi are a particularly attractive class of organism for terpenoid pathway discovery, as they often cluster their biosynthetic genes. The affordability of genome sequencing and the relatively small size of fungal genomes further simplify this process. While only a select few fungal strains are genetically tractable, many terpenoid biosynthetic genes are functional in Escherichia coli and Saccharomyces cerevisiae, allowing easy characterization. Identification of new terpenoid biosynthetic pathways has the potential to uncover new pharmaceutical compounds and establish new strategies for metabolic engineering.