The demand for personal care products has been increasing steadily. Consumers are now seeking for products that offer enhanced functionality, natural ingredients, and superior feeling experiences. Fragrances and flavors are key components in personal care formulations. Terpenes and their derivatives dominate natural fragrances due to their diverse structures and scents, widespread availability from plants and animals, stable function, and high safety profile. The terpene fragrance market is projected to grow at an annual growth rate of 6.4%, reaching $1.01 billion by 2028, indicating a high market revenue and promising future. Currently, the acquisition of natural terpene fragrances is constrained by the long growth cycle of plants, low terpene content, and high extraction cost. Thus, there is an urgent need for developing new technology, such as synthetic biology, to achieve large-scale production of diverse fragrance compounds at an environment-friendly manner. This review explores the application and development of synthetic biology in the sustainable production of terpene fragrances, highlighting how data-driven synthetic biology and biotechnological innovations empower terpene fragrance production. It also compares classical and alternative terpenoid biosynthesis pathways, elucidating their differences and advantages, which can offer comprehensive insights for chassis design toward terpenoid efficient biosynthesis. Additionally, this review explores recent advances in terpene synthase discovery and engineering as well as cell factory construction. Furthermore, we comprehensively summarizes challenges encountered in the construction of three major types of terpene fragrance cell factories: monoterpenes, sesquiterpenes, and nor-isoprenoids, and discusses metabolic engineering strategies that can be employed to address these issues, including enzyme optimization, pathway reconstruction, and cellular detoxification. At the end, we comment the current landscape of patents and industrial competition, offering insights into future challenges and opportunities, including the hurdles of biosynthesis technology, the discovery and design of new products, as well as the market regulation and safety concerns.