Sesquiterpenes comprise a diverse group of natural products with a wide range of applications in cosmetics, food, medicine, agriculture, and biofuels. Heterologous biosynthesis is increasingly employed for sesquiterpene production, aiming to overcome the limitations associated with chemical synthesis and natural extraction. Sesquiterpene synthases (STSs) play a crucial role in the heterologous biosynthesis of sesquiterpene. Under the catalysis of STSs, over 300 skeletons are produced through various cyclization processes (C1-C10 closure, C1-C11 closure, C1-C6 closure, and C1-C7 closure), which are responsible for the diversity of sesquiterpenes. According to the cyclization types, we gave an overview of advances in understanding the mechanism of STSs cyclization from the aspects of protein crystal structures and site-directed mutagenesis. We also summarized the applications of engineering STSs in the heterologous biosynthesis of sesquiterpene. Finally, the bottlenecks and potential research directions related to the STSs cyclization mechanism and application of modified STSs were presented.