Sesquiterpenoids are important secondary metabolites with various pharma-and nutraceutical properties. In particular, higher basidiomycetes possess a versatile biosynthetic repertoire for these bioactive compounds. To date, only a few microbial production systems for fungal sesquiterpenoids have been established. Here, we introduce Ustilago maydis as a novel production host. This model fungus is a close relative of higher basidiomycetes. It offers the advantage of metabolic compatibility and potential tolerance for substances toxic to other microorganisms. We successfully implemented a heterologous pathway to produce the carotenoid lycopene that served as a straightforward read-out for precursor pathway engineering. Overexpressing genes encoding enzymes of the mevalonate pathway resulted in increased lycopene levels. Verifying the subcellular localization of the relevant enzymes revealed that initial metabolic reactions might take place in peroxisomes: despite the absence of a canonical peroxisomal targeting sequence, acetyl-CoA C-acetyltransferase Aat1 localized to peroxisomes. By expressing the plant (+)-valencene synthase CnVS and the basidiomycete sesquiterpenoid synthase Cop6, we succeeded in producing (+)valencene and α-cuprenene, respectively. Importantly, the fungal compound yielded about tenfold higher titers in comparison to the plant substance. This proof of principle demonstrates that U. maydis can serve as promising novel chassis for the production of terpenoids.