High-energy-density liquid fuels (HED fuels) are essential for volume-limited aerospace vehicles and could serve as energetic additives for conventional fuels. Terpene-derived HED biofuel is an important research field for green fuel synthesis. The direct extraction of terpenes from natural plants is environmentally unfriendly and costly. Designing efficient synthetic pathways in microorganisms to achieve high yields of terpenes shows great potential for the application of terpene-derived fuels. This review provides an overview of the current research progress of terpene-derived HED fuels, surveying terpene fuel properties and the current status of biosynthesis. Additionally, we systematically summarize the engineering strategies for biosynthesizing terpenes, including mining and engineering terpene synthases, optimizing metabolic pathways and cell-level optimization, such as the subcellular localization of terpene synthesis and adaptive evolution. This article will be helpful in providing insight into better developing terpene-derived HED fuels.