Conifers have evolved elaborate inducible, terpenoid-based defense mechanisms to deter attacks from bark beetles and other herbivore species. Herbivore damage triggers the production of oleoresin containing monoterpene, sesquiterpene and diterpene components that serve as toxins and physical barriers to herbivore invasion. Induced terpene formation appears to be regulated by specific enzymes of terpene metabolism whose activity increases on herbivore damage. Among the best studied of these are terpene synthases, enzymes which convert acyclic prenyl diphosphates to the parent terpene skeletons. Terpene synthase activity in turn is regulated by the transcription of terpene synthase genes. Induced terpene biosynthesis is also often accompanied by extensive cellular differentiation, including the formation of new resin ducts. The signal transduction cascades that initiate these shifts in conifer metabolism and cell differentiation are poorly understood due to the lack of well-developed model systems and appropriate genetic mutants. However, there are strong indications that octadecanoid pathway metabolites and ethylene have roles in this signaling, as they do in defense signaling in angiosperms. There are still large gaps in our knowledge of the signal transduction networks leading to herbivore-induced terpenoid accumulation in conifers. However, the development of new genomic, proteomic and metabolomic tools, as well as the establishment of convenient in vitro systems should facilitate more rapid advances in this field in the near future. The results will have important implications for understanding the evolution of conifer defense mechanisms as well as for the management of commercially important forest tree species, such as spruce, pine, and fir.