Terpenoids are a diverse group of compounds with isoprene units as basic building blocks. They are widely used in the food, feed, pharmaceutical, and cosmetic industries due to their diverse biological functions such as antioxidant, anticancer, and immune enhancement. With an increase in understanding the biosynthetic pathways of terpenoids and advances in synthetic biology techniques, microbial cell factories have been built for the heterologous production of terpenoids, with the oleaginous yeast Yarrowia lipolytica emerging as an outstanding chassis. In this paper, recent progress in the development of Y. lipolytica cell factories for terpenoid production with a focus on the advances in novel synbio tools and metabolic engineering strategies toward enhanced terpenoid biosynthesis is reviewed.