<p>Previous studies have highlighted a positive role of ethylene in regulating in vitro shoot regeneration in the woody species <i>Solanum betaceum</i> Cav. (tamarillo). However, the involvement of ethylene in the indirect somatic embryogenesis (SE) process of tamarillo remains insufficiently understood. The main objective of this study was, therefore, to elucidate how ethylene influences embryogenic callus induction and somatic embryo development in tamarillo by chemically modulating its biosynthesis and perception. The results demonstrated that ethylene is essential for the induction of embryogenic callus, whereas inhibition of its biosynthesis by aminoethoxyvinylglycine (AVG) enhanced somatic embryo differentiation. Leaf explants treated with AVG exhibited delayed cell dedifferentiation and impaired acquisition of totipotency, along with associated changes, including higher cytokinin (CK) levels and upregulation of the positive regulator of CK responses, <i>ARR1</i>. During the development of somatic embryos, AVG treatments promoted somatic embryo differentiation, whereas application of the ethylene-releasing compound, ethephon, negatively affected both embryo formation and differentiation by downregulating the expression of the SE-related gene <i>BBM2</i> and reducing CK levels. Our findings indicate that a rapid increase in endogenous 1-aminocyclopropane-1-carboxylic acid (ACC) levels, together with increased <i>SERK1</i> and <i>BBM2</i> expression, during the early weeks of SE, are associated with cell dedifferentiation and further acquisition of embryogenic competence, while lower ACC levels are required for subsequent embryo initiation. Overall, this study provides novel insights into the molecular and metabolic mechanisms regulated by ethylene during the SE process, with potential for improving in vitro regeneration systems in tamarillo and other woody species.</p>