Terpenoids are a group of chemicals of great importance for human health and prosperity. Terpenoids can be used for human and animal nutrition, treating diseases, enhancing agricultural output, biofuels, fragrances, cosmetics, and flavouring. However, due to the rapid depletion of global natural resources and manufacturing practices relying on unsustainable petrochemical synthesis, there is a need for economic alternatives to supply the world's demand for these essential chemicals. Microbial biosynthesis offers the means to develop scalable and sustainable bioprocesses for terpenoid production. In particular, the non-conventional yeast Yarrowia lipolytica demonstrates excellent potential as a chassis for terpenoid production due to its amenability to industrial production scale-up, genetic engineering, and high accumulation of terpenoid precursors. This review aims to illustrate the scientific progress in developing Y. lipolytica terpenoid cell factories, focusing on metabolic engineering approaches for strain improvement and cultivation optimization.