SUMMARYBorneol, camphor, and bornyl acetate are highly promising monoterpenoids widely used in medicine, flavor, food, and chemical applications. Bornyl diphosphate (BPP) serves as a common precursor for the biosynthesis of these monoterpenoids. Although bornyl diphosphate synthase (BPPS) that catalyzes the cyclization of geranyl diphosphate (GPP) to BPP has been identified in multiple plants, the enzyme responsible for the hydrolysis of BPP to produce borneol has not been reported. Here, we conducted in vitro and in vivo functional characterization to identify the Nudix hydrolase WvNUDX24 from W. villosa, which specifically catalyzes the hydrolysis of BPP to generate bornyl phosphate (BP), and then BP forms borneol under the action of phosphatase. Subcellular localization experiments indicated that the hydrolysis of BPP likely occurs in the cytoplasm. Furthermore, site‐directed mutagenesis experiments revealed that four critical residues (R84, S96, P98, and G99) for the hydrolysis activity of WvNUDX24. Additionally, the functional identification of phosphatidic acid phosphatase (PAP) demonstrated that WvPAP5 and WvPAP10 were able to hydrolyze geranylgeranyl diphosphate (GGPP) and farnesyl diphosphate (FPP) to generate geranylgeranyl phosphate (GGP) and farnesyl phosphate (FP), respectively, but could not hydrolyze BPP, GPP, and neryl diphosphate (NPP) to produce corresponding monophosphate products. These findings highlight the essential role of WvNUDX24 in the first step of BPP hydrolysis to produce borneol and provide genetic elements for the production of BPP‐related terpenoids through plant metabolic engineering and synthetic biology.