Terpenes are chief constituents of essential oils. These are very widely used as permeation enhancers in transdermal formulations. These are made up of several isoprene units (C5H8) and are classified based on the number of isoprene units. Monoterpenes contain two isoprene units C10H16, sesquiterpenes contain three isoprene units C15H24, Diterpenoids contain four isoprene units C20H32, Triterpenoids contain six isoprene units C30H48, Tetraterpenoids contain eight isoprene units C40H64. They are further divided into acyclic, monocyclic, bicyclic etc., based on the number of carbon atoms present. In the present article a review on different types of terpenes is given based on the lipophilicity of the drug.