Endophytic fungi, a diverse group with phylogenetic variations, intricately colonize plant tissues, establishing complex interactions with host plants and microbiomes. At the beginning of the chapter, the multifaceted chemical interkingdom dynamics (where endophytic fungi modulate host defense mechanisms, fungal virulence factors, and microbiome interactions) is explored. The delicate balance achieved contributes to plant health, even under stress conditions. Endophytic fungi produce a plethora of secondary metabolites, particularly terpenoids, which play pivotal roles in ecological functions and trophic interactions. Terpenoids, the largest and most diverse bioactive secondary metabolites, exhibit various functions, including defense, signaling, and growth regulation. Their biosynthesis involves intricate steps, resulting in structurally diverse compounds with potential therapeutic applications. This chapter delves into the role of terpenoids in mediating endophytic fungus-host plant and fungus-microbiome interactions. It also discusses the classification, biosynthesis, and biological activities of terpenoids from endophytic fungi and emphasizes their potential as therapeutic agents. Despite significant strides, challenges remain in understanding the molecular mechanisms and utilizing endophytic fungi for industrial production. Future research directions incorporate multidisciplinary approaches, such as genomics, metabolomics, and synthetic biology, to unlock the full potential of terpenoids from endophytic fungi.