Covering: up to August 2002 This review covers the biosynthesis of the starter units of terpenoids, isopentenyl diphosphate (IPP) and dimethylallyl diphosphate (DMAPP) via the nonmevalonate pathway together with a new enzyme involved in the conversion of IPP and DMAPP, i.e. type 2 IPP isomerase. The biosynthesis of terpenoids produced by actinomycetes is also reviewed. 117 references are cited.