Terpenoids emitted from snapdragon flowers include three monoterpenes derived from geranyl diphosphate (GPP), myrcene, (E)-β-ocimene and linalool, and a sesquiterpene, nerolidol, derived from farnesyl diphosphate (FPP). Using a functional genomics approach, we have isolated and biochemically characterized two nearly identical nerolidol/linalool synthases, AmNES/LIS-1 and AmNES/LIS-2, two enzymes responsible for the terpenoid profile of snapdragon scent remaining to be characterized. The AmNES/LIS-2 protein has an additional 30 amino acids in the N-terminus, and shares 95% amino acid sequence identity with AmNES/LIS-1, with only 23 amino acid substitutions distributed across the homologous regions of the proteins. Although these two terpene synthases have very similar catalytic properties, and synthesize linalool and nerolidol as specific products from GPP and FPP, respectively, they are compartmentally segregated. GFP localization studies and analysis of enzyme activities in purified leucoplasts, together with our previous feeding experiments, revealed that AmNES/LIS-1 is localized in cytosol, and is responsible for nerolidol biosynthesis, whereas AmNES/LIS-2 is located in plastids, and accounts for linalool formation. Our results show that subcellular localization of bifunctional enzymes, in addition to the availability of substrate, controls the type of product formed. By directing nearly identical bifunctional enzymes to more than one cellular compartment, plants extend the range of available substrates for enzyme utilization, thus increasing the diversity of the metabolites produced.