The endoplasmic reticulum (ER) is a dynamic organelle that synthesizes and folds proteins. An imbalance between the ER protein synthesis load and its folding capacity triggers the unfolded protein response, thereby restoring normal ER functions via size adjustment. Inspired by such inherent genetic programming events, we engineered Saccharomyces cerevisiae to expand the ER by overexpressing a key ER size regulatory factor, INO2. ER space expansion enhanced ER protein synthesis and folding capacity, and relieved metabolic constraints imposed by the limited enzyme abundance. Harnessing the yeast ER for metabolic engineering, we ultimately increased the production of squalene and cytochrome P450-mediated protopanaxadiol by 71-fold and 8-fold, compared to their respective control strains without overexpression of INO2. Furthermore, genome-wide transcriptome analysis of the ER-expanded strain revealed that the significant improvement in terpene production was associated with global rewiring of the metabolic network. Therefore, the yeast ER can be engineered as a specialized compartment for enhancing terpene production, representing new possibilities for the high-level production of other value-added chemicals.