A putative terpene cyclase vir4, which is a member of a secondary metabolite cluster, has been deleted in Trichoderma virens to determine its function. The deletion mutants were compared for volatile production with the wild-type as well as two other Trichoderma spp. This gene cluster was originally predicted to function in the synthesis of viridin and viridiol. However, the experimental evidence demonstrates that this gene cluster is involved in the synthesis of volatile terpene compounds. The entire vir4-containing gene cluster is absent in two other species of Trichoderma, T. atroviride and T. reesei. Neither of these two species synthesizes volatile terpenes associated with this cluster in T. virens. We have thus identified a novel class of volatile fungal sesquiterpenes as well as the gene cluster involved in their biosynthesis.