Terpenoids, as key secondary metabolites, are involved in physiological processes such as antioxidation, signaling, and stomatal movement in plants under adversity stress, and play an important role in plant adversity response. They can not only directly participate in plant defense mechanisms, but also act as signaling molecules to regulate plant-plant interactions and influence the adaptability and stability of plant communities. Due to their wide range of biological activities, terpenoids have been widely used in the food, pharmaceutical and cosmetic industries. With the development of synthetic biotechnology, the research field of terpenoids will become more diversified and challenging, and their applications will be more promising. This review comprehensively analyzed the biosynthetic pathways of terpenoids and their physiological and ecological functions in plants, aiming to deepen the understanding of the adaptive strategies of plants to adversity, to provide reference for the study of plant resistance, and to provide a new approach for the development of sustainable agriculture and pharmaceutical and health industries.