Essential oils are important agro-based industrial products. They find wide application in various types of industries, manufacturing food products, beverages, pharmaceuticals, cosmetics and paints. Chemically the essential oils are composed of organic compounds usually hydrocarbon, alcohol, aldehyde and ketone in nature. It is with the advancement of Science that a better knowledge of the constituents of the oils is gained. It is found that the oils contain chiefly liquid and more or less volatile compounds of many classes of organic substances. Some of these are aromatic compounds, still others are aliphatic substances which belong largely to the ester or aldehyde classes. In general, however, most of the compounds belong to the general class of substances known as terpenes. Chemistry of terpenes has been described in detail. Most important are the monocyclic and dicyclic terpenes. These terpenes along with derivatives are usually present in the essential oils. chemistry of essential oils, their origin, location and functions in plants is viewed in this article.