Terpenoids are structurally diverse natural products that have been widely used in the pharmaceutical, food, and cosmetic industries. Research has shown that fungi produce a variety of terpenoids, yet fungal terpene synthases remain not thoroughly explored. In this study, the tps1 gene, a crucial component of the terpene synthetic pathway, was isolated from Trichoderma atroviride HB20111 through genome mining. The function of this gene in the terpene synthetic pathway was investigated by constructing tps1-gene-deletion- and overexpression-engineered strains and evaluating the expression differences in the tps1 gene at the transcript level. HS-SPME-GC-MS analysis revealed significant variations in terpene metabolites among wild-type, tps1-deleted (Δtps1), and tps1-overexpressed (Otps1) strains; for instance, most sesquiterpene volatile organic compounds (VOCs) were notably reduced or absent in the Δtps1 strain, while nerolidol, β-acorenol, and guaiene were particularly produced by the Otps1 strain. However, both the Δtps1 and Otps1 strains produced new terpene metabolites compared to the wild-type, which indicated that the tps1 gene played an important role in terpene synthesis but was not the only gene involved in T. atroviride HB20111. The TPS1 protein encoded by the tps1 gene could function as a sesquiterpene cyclase through biological information and evolutionary tree analysis. Additionally, fungal inhibition assay and wheat growth promotion assay results suggested that the deletion or overexpression of the tps1 gene had a minimal impact on fungal inhibitory activity, plant growth promotion, and development, as well as stress response. This implies that these activities of T. atroviride HB20111 might result from a combination of multiple metabolites rather than being solely dependent on one specific metabolite. This study offers theoretical guidance for future investigations into the mechanism of terpenoid synthesis and serves as a foundation for related studies on terpenoid metabolic pathways in fungi.