Endophytic fungi are a highly diverse group of fungi that intermittently colonize all plants without causing symptoms of the disease. They sense and respond to physiological and environmental changes of their host plant and microbiome. The inter-organism interactions are largely driven by chemical networks mediated by specialized metabolites. The balance of these complex interactions leads to healthy and strong host plants. Endophytic strains have particular machinery to produce a plethora of secondary metabolites with a variety of bioactivities and unknown functions in an ecological niche. Terpenoids play a key role in endophytism and represent an important source of bioactive molecules for human health and agriculture. In this review, we describe the role of endophytic fungi in plant health, fungal terpenoids in multiple interactions, and bioactive fungal terpenoids recently reported from endophytes, mainly from plants used in traditional medicine, as well as from algae and mangroves. Additionally, we highlight endophytic fungi as producers of important chemotherapeutic terpenoids, initially discovered in plants. Despite advances in understanding endophytism, we still have much to learn in this field. The study of the role, the evolution of interactions of endophytic fungi and their terpenoids provide an opportunity for better applications in human health and agriculture.