<p>Santalene and santalol, the primary active components of sandalwood essential oils, possess excellent pharmacological properties, including neurosedative, antibacterial, and anti-inflammatory activities. Owing to the limited supply of sandalwood, heterologous biosynthesis of santalene and santalol has garnered extensive attention. With the rapid advancements in synthetic biology, microbial cell factories have emerged as promising and sustainable methods for production of santalene and santalol. This review summarizes the advances in mining, functional expression, structural characterization, and catalytic mechanisms of two key enzymes in the pathway for production of santalene and santalol: santalene synthase and oxygenase. We have also elucidated metabolic engineering strategies across diverse microbial and plant chassis species, including <i>Escherichia coli</i>, <i>Saccharomyces cerevisiae</i>, and tobacco. Furthermore, we have critically analyzed the current bottlenecks that limit the industrial application of santalene and santalol biosynthesis and identified future directions that may address these problems.</p>