Terpenes are naturally occurring hydrocarbon chains found in all organisms. These hydrocarbons are made up of building blocks of five carbon chains known as isoprenes (isoterpenes, C₅H₈). Terpenes are important in brewing for their role in hops, specifically, but not isolated to, their presence in hop essential oils. These comprise between 0.5% and 3% of the total hop weight. Terpenes in essential oils are broken down into three types of compounds—hydrocarbons (50%–80%), oxygenated hydrocarbons (20%–50%), and hydrocarbons that contain chemically bound sulfur (1%). The relative concentrations of these can be used to identify different hop varieties.

The most common and important terpenes in hop essential oils are the monoterpene (C₁₀) myrcene and the sesquiterpenes (C₁₅) caryophyllene and humulene. These highly aromatic compounds are so water insoluble that they rarely survive into finished beer unless added during dry hopping. Oxygenated hop terpenes are more likely to survive the kettle boil because they are more water soluble than the unoxidized hydrocarbons. However, their impact on the finished beer is hard to quantify because of additional chemical changes during transesterification by yeast cells during fermentation. Important oxygenated terpenes include linalool and geraniol, which contribute floral characteristics to finished beer, as well as limonene and alpha-terpineol, which contribute citrus characteristics. Little is known about the sulfur-containing hydrocarbons and their aromatic contribution.