This review describes the different approaches that have been used to manipulate and improve carotenoid production in Xanthophyllomyces dendrorhous. The red yeast X. dendrorhous (formerly known as Phaffia rhodozyma) is one of the microbiological production systems for natural astaxanthin. Astaxanthin is applied in food and feed industry and can be used as a nutraceutical because of its strong antioxidant properties. However, the production levels of astaxanthin in wild-type isolates are rather low. To increase the astaxanthin content in X. dendrorhous, cultivation protocols have been optimized and astaxanthin-hyperproducing mutants have been obtained by screening of classically mutagenized X. dendrorhous strains. The knowledge about the regulation of carotenogenesis in X. dendrorhous is still limited in comparison to that in other carotenogenic fungi. The X. dendrorhous carotenogenic genes have been cloned and a X. dendrorhous transformation system has been developed. These tools allowed the directed genetic modification of the astaxanthin pathway in X. dendrorhous. The crtYB gene, encoding the bifunctional enzyme phytoene synthase/lycopene cyclase, was inactivated by insertion of a vector by single and double cross-over events, indicating that it is possible to generate specific carotenoid-biosynthetic mutants. Additionally, overexpression of crtYB resulted in the accumulation of β-carotene and echinone, which indicates that the oxygenation reactions are rate-limiting in these recombinant strains. Furthermore, overexpression of the phytoene desaturase-encoding gene (crtI) showed an increase in monocyclic carotenoids such as torulene and HDCO (3-hydroxy-3′,4′-didehydro-β,-ψ-carotene-4-one) and a decrease in bicyclic carotenoids such as echinone, β-carotene and astaxanthin.