Terpenoids have a wide range of applications in the pharmaceutical, agrochemical, perfume, pigment and biofuel industries. The generation of novel terpenoids and increased understanding of the mechanisms of their formation would be of great value in both academic and industrial settings. Terpene synthases catalyse the metal-dependent conversion of linear isoprenyl diphosphates into a myriad of cyclic or acyclic structures through a series of complex reaction cascades involving high-energy carbocationic intermediates. The final intermediate is quenched through proton loss or nucleophilic attack of water to generate pure hydrocarbon or alcohol compounds. The ability of terpene synthases to generate hydroxylated products through regio- and stereoselective ‘water capture’ represents a potential short-cut to the manufacture of oxidised terpenes, which is yet to be fully explored. The first part of this project focused on two sesquiterpene synthases, (-)-germacradien-4-ol synthase (GdolS) and (+)-epicubenol synthase, which catalyse water quench to generate hydroxylated products. These enzymes were characterised, and their water management mechanisms explored through the use of site-directed mutagenesis (SDM) and product formation analysis of the obtained mutants. This work has revealed a delicate structural task for A176 in GdolS that governs product selection, among other studies. The second part of this project describes the synthesis of substrate analogues for their use with a selection of sesquiterpene synthases. These analogues were designed to intercept reaction pathways or trap alternative products. The insertion of a C6-fluorine atom can electronically influence the neighbouring carbocation after 1,6-cyclisation. C6-methyl group incorporation affect the enzyme-substrate complex geometry through steric effected and conformational changes. The absence of a methyl group at C7 gives novel insights into the requirement needed for catalysis in sesquiterpene synthases because it is a potentially more flexible substrate and reduces the stability of the forming carbocation intermediate after 1,6-cyclisation. Thiirane analogues were also synthesised to explore their acceptance by the sesquiterpene synthases. The last section describes the developmental work for a directed evolution approach to increase the catalytic performance of sesquiterpene synthases. This method combines the use of error-prone PCR to diversify the sesquiterpene synthases encoding genes and a colorimetric assay to screen sesquiterpene synthase activities.