The traditional Chinese medicine Atractlodis Rhizoma is the dried rhizome of the Asteraceae herbal plant Atractylodes lancea, and it has the functions of drying dampness and strengthening the spleen, removing wind and dissipating cold, and brightening the eyes. The sesquiterpenoids in A. lancea are the main ingredients of its pharmacological activities in clinical practice, including atractylone, β-eudesmol, and hinesol, which possess anti-inflammation, antibacterial, antiviral, and hepatoprotective effects. This study focused on the biosynthesis of sesquiterpenoids in A. lancea, summarized the proportion of the main active ingredients in A. lancea from the genuine region and the non-genuine region, elaborated on the research progress of genes related to biosynthesis pathways, and systematically sorted out the biotic and abiotic factors affecting their biosynthesis, so as to provide a theoretical basis for further research on the biosynthetic mechanism of sesquiterpenoids in A. lancea and development of high-quality medicinal materials of A. lancea.