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Abstract Background Eremophila R.Br. (Scrophulariaceae) is a diverse genus of plants with species distributed across semi-arid and arid Australia. It is an ecologically important genus that also holds cultural significance for many Indigenous Australians who traditionally use several species as sources of medicines. Structurally unusual diterpenoids, particularly serrulatane and viscidane-types, feature prominently in the chemical profile of many species and recent studies indicate that these compounds are responsible for much of the reported bioactivity. We have investigated the biosynthesis of diterpenoids in three species: Eremophila lucida, Eremophila drummondii and Eremophila denticulata subsp. trisulcata. Results In all studied species diterpenoids were localised to the leaf surface and associated with the occurrence of glandular trichomes. Trichome-enriched transcriptome databases were generated and mined for candidate terpene synthases (TPS). Four TPSs with diterpene biosynthesis activity were identified: ElTPS31 and ElTPS3 from E. lucida were found to produce (3Z,7Z,11Z)-cembratrien-15-ol and 5-hydroxyviscidane, respectively, and EdTPS22 and EdtTPS4, from E. drummondii and E. denticulata subsp. trisulcata, respectively, were found to produce 8,9-dihydroserrulat-14-ene which readily aromatized to serrulat-14-ene. In all cases, the identified TPSs used the cisoid substrate, nerylneryl diphosphate (NNPP), to form the observed products. Subsequently, cis-prenyl transferases (CPTs) capable of making NNPP were identified in each species. Conclusions We have elucidated two biosynthetic steps towards three of the major diterpene backbones found in this genus. Serrulatane and viscidane-type diterpenoids are promising candidates for new drug leads. The identification of an enzymatic route to their synthesis opens up the possibility of biotechnological production, making accessible a ready source of scaffolds for further modification and bioactivity testing.