Various applications of biotechnological methods for the production of volatile compounds useful to the food and pharmaceutical industries are discussed. The yields obtained from intact or genetically modified plants are compared to those achieved by microbial methods. Plant yields are too low for the products to compete commercially to those synthesized chemically. Still lower yields are obtained with in vitro-cultured plant tissues. Trangenic plants with altered methylerythritol path gave 50% more essential oil in the best case. The 100-fold increases in shikimate-derived volatiles, obtained with overexpressed alcohol dehydrogenase and five-fold more C6 volatle aldehydes and 2-phenylethanol, were produced with overexpressed lipoxygenase and 2-phenylethanol dehydrogenase, respectively. However, the most spectacular yields were observed with biotransformations catalysed by microorganisms. Kluyveromyces marxianus, produces over 26 g/l 2-phenylethanol from phenyalanine, whereas Candida sorbophila, Mucor circillenoides or Yarrowia lipolytica can produce 5–40 g/l γ-decalactone from ricinoleic acid. Vanillin production from ferulic acid is in the range 12–60 g/l with Amycolatopsis and Streptomyces species. Vanillin can be produced at 5 g/l by Escherichia coli and amorphadiene yields of 37 g/l have been observed with Saccharomyces cerevisiae, both with the genetically overexpressed methyl–erythritol path. Genetically engineered β-oxidation genes result in yields of 10 g/l γ-decalactone by Yarrowia lipolytica and up to 80 g/l dicaboxylic acids by various yeasts. These results far exceed the theoretical limit of about 1 g/l required for consideration of a procedure as a commercially interesting process, alternative to chemical sythesis. Copyright © 2010 John Wiley & Sons, Ltd.