Sterol homeostasis in yeast is governed by a complex and highly coordinated regulatory network that integrates transcriptional, post-translational, and subcellular mechanisms. These include modulation of gene expression, targeted degradation of biosynthetic enzymes, dynamic conversion of sterols into storage forms, and precise control of sterol trafficking, uptake, and secretion. Disruption of sterol homeostasis not only represents a major bottleneck limiting sustainable sterol overproduction, but also significantly impacts terpenoid biosynthesis. This review summarizes current knowledge of sterol homeostasis regulatory mechanisms in yeast, and introduces representative metabolic engineering strategies targeting key molecular players to maintain sterol homeostasis, highlighting their applications in sterol and terpenoid production. Additionally, we discuss the remaining challenges and propose future directions to overcome metabolic flux limitations and cytotoxicity constraints in yeast-based sterol production platforms.