Terpenes are a large group of metabolites found in bacteria, fungi, plants and marine organism. These molecules have diverse functions in nature including defense compounds against predatory insects, light-harvesting and light-protecting pigments, roles as modulators of membrane fluidity, and antimicrobial agents. These compounds also have medicinal properties and drugs like Taxol RTM and artimisinin are valuable therapeutics. One of the primary goals off this work was to establish terpene compounds in a heterologous host, free from native host regulation, in order to investigate enzyme activity and generate terpene structural diversity. In addition we explored the area of bacterial and fungal terpene biosynthesis since work in the area is only in its infancy. To this end we identified three sesquiterpene synthase from bacteria. Germacrene sythase (NS1) from Nostoc sp PCC 7122 along with both a eudesmadiene synthase (NP1) and a germacradieneol sythase (NP2) from N. punctiforme are three novel bacterial sesquiterpene synthases described here for the first time. In this work NS1 is expressed in E. coli with its clustered cytochrome P450/reductase partners and a novel oxygenated sesquiterpene is produced. In addition to the cyanobacterial genes six sesquiterpene synthases from Coprinus cinerea are cloned and characterized. These enzymes are all novel enzymes from basidiomycetes both muurolene synthase (cop3) and cuprenene sythase (cop6) have not been described previously. Cuprenene sythase had two cytochrome P450 clustered with it in the genome and using metabolic engineering of S. cervisae we were to utilize the native reductase system and oxygenate cuprenene in vivo. Finally in this work we were able to lay the ground work in the purification of the illudin cyclase from O. olearius.