SUMMARY Tansy (Tanacetum vulgare L., Asteraceae) is an under-exploited species adapted to a northern climate. Its flower heads and leaves are characterized by their terpenoids which are moderately bioactive against insects. A related species, pyrethrum (Tanacetum cinerariifolium Vis.), produces highly bioactive terpenoids, pyrethrins, which are used in commercial biopesticides. The constraint of pyrethrum for further utilization is its cold sensitivity. In this study, tissue culture methods for tansy and pyrethrum were first developed to optimize the best conditions for protoplast isolation from donor tissues. Protoplast fusion between tansy and pyrethrum was developed using polyethyleneglycol. In addition, the genetic and chemical biodiversity of tansy was explored to find new germplasm for the further breeding experiments. Up to 1 × 106 protoplasts per 1 g−1 FW of leaves could be obtained from tansy leaves. The production of protoplast-derived calli varied, but the best time for cell division was late winter or early spring. Protoplast-derived calli of tansy resulted in root and spontaneous shoot formation, although a protoplast-to-plant procedure still needs more studies. The hybridity of intraspecific (tansy × tansy) and interspecific (tansy × pyrethrum) protoplast fusion was successfully tested already at the callus stage. The nuclear DNA content was higher for calli derived from interspecific fusion (10.66 and 31.87 pg) than from intraspecific fusion (8.84, 15.96 and 19.59 pg). The nuclear DNA content of both types of fusion calli was more than the parental level in many fusion calli. The increased content of nuclear DNA in the fusion calli suggests that some degree of protoplast hybridization had occurred. The distance matrices calculated from the RAPD-PCR data with complete linkage cluster analysis showed that the calli derived from the intraspecific fusion were closer to tansy than to pyrethrum. In contrast, the calli derived from interspecific fusion were closer to pyrethrum than to tansy. Compounds such as syringaldehyde, coniferyl alcohol and artedouglasia oxide were only identified from protoplast-fusion derived calli, but no compounds common for parental tissues and fusion calli could be detected. Tansy grown in Finland contains a wide range of genetic, chemical and morphological variation. Especially, among the larger number of volatile compounds detected from tansy, the chemotypes accumulating irregular monoterpenes such as artemisia ketone and davadone D, which are biochemically close to pyrethrins, are an interesting source for further biotechnological applications. In conclusion, biodiversity can be a valuable source of novel germplasm for breeding tansies that better accumulate more bioactive compounds.