The plant-derived terpenoids are considered to be the most potent anticancer, anti-inflammatory and anticarcinogenic compounds known. Enzymatic biotransformation is a very useful approach to expand the chemical diversity of natural products. Recent enzymatic biotransformation studies on terpenoids have resulted in the isolation of novel compounds. 14-hydroxy methyl caryophyllene oxide produced from caryophyllene oxide showed a potent inhibitory activity against the butyryl cholinesterase enzyme, and was found to be more potent than parent caryophyllene oxide. The metabolites 3β,7β-dihydroxy-11-oxo-olean-12-en-30-oic acid, betulin, betulonic acid, argentatin A, incanilin, 18β glycyrrhetinic acid, 3,11-dioxo-olean-12-en-30-oic acid produced from 18β glycyrrhetinic acid were screened against the enzyme lipoxygenase. 3,11-Dioxo-olean-12-en-30-oic acid, was found to be more active than the parent compound. The metabolites 3β-hydroxy sclareol 18α-hydroxy sclareol, 6α,18α-dihydroxy sclareol, 11S,18α-dihydroxy sclareol, and 1β-hydroxy sclareol and 11S,18α-dihydroxy sclareol produced from sclareol were screened for antibacterial activity. 1β-Hydroxy sclareol was found to be more active than parent sclareol. There are several reports on natural product enzymatic biotransformation, but few have been conducted on terpenes. This review summarizes the classification, advantages and agents of enzymatic transformation and examines the potential role of new enzymatically transformed terpenoids and their derivatives in the chemoprevention and treatment of other diseases.