Sandalwood essential oil is extracted from the heartwood part of mature sandalwood and is known for its pleasant fragrance and exceptional medicinal activities, including antimicrobial, antitumor, and anti-inflammatory properties. The (Z)-α-santalol and (Z)-β-santalol are the most vital ingredients contributing to sandalwood oil’s bioactivities and unique woody odor characteristics. Metabolic engineering strategies have shown promise in transforming microorganisms such as yeast and bacteria into effective cell factories for enhancing the production of vital sesquiterpenes (santalene and santalol) found in sandalwood oil. This review aims to summarize sources of sandalwood oil, its components/ingredients, and its applications. It also highlights the biosynthesis of santalene and santalol and the various metabolic engineering strategies employed to reconstruct and enhance santalene and santalol biosynthesis pathways in heterologous hosts.
