BACKGROUND: Hops (Humulus lupulus L.) are a dioecious climbing perennial, with the dried mature "cones" (strobili) of the pistillate/female inflorescences being widely used as both a bittering agent and to enhance the flavour of beer. The glandular trichomes of the bract and bracteole flowering structures of the cones produce an abundance of secondary metabolites, such as terpenoids, bitter acids and prenylated phenolics depending on plant genetics, developmental stage and environment. More knowledge is required on the functional and allelic diversity of terpene synthase (TPS) genes responsible for the biosynthesis of volatile terpenes to assist in flavour-directed hop breeding. RESULTS: Major volatile terpene compounds were identified using gas chromatography-mass spectrometry (GC-MS) in the ripe cones of twenty-one hop cultivars grown in New Zealand. All cultivars produced the monoterpene ß-myrcene and the sesquiterpenes α-humulene and ß-caryophyllene, but the quantities varied broadly. Other terpenes were found in large quantities in only a smaller subset of cultivars, e.g. ß-farnesene (in seven cultivars) and α-pinene (in four). In four contrasting cultivars (Wakatu™, Wai-iti™, Nelson Sauvin™, and 'Nugget'), terpene production during cone development was investigated in detail, with concentrations of some of the major terpenes increasing up to 1000-fold during development and reaching maximal levels from 50-60 days after flowering. Utilising the published H. lupulus genome, 87 putative full-length and partial terpene synthase genes were identified. Alleles corresponding to seven TPS genes were amplified from ripe cone cDNA from multiple cultivars and subsequently functionally characterised by transient expression in planta. Alleles of the previously characterised HlSTS1 produced humulene/caryophyllene as the major terpenes. HlRLS alleles produced (R)-(-)-linalool, whilst alleles of two sesquiterpene synthase genes, HlAFS1 and HlAFS2 produced α-farnesene. Alleles of HlMTS1, HlMTS2 and HlTPS1 were inactive in all the hop cultivars studied. CONCLUSIONS: Alleles of four TPS genes were identified and shown to produce key aroma volatiles in ripe hop cones. Multiple expressed but inactive TPS alleles were also identified, suggesting that extensive loss-of-function has occurred during domestication and breeding of hops. Our results can be used to develop hop cultivars with novel/improved terpene profiles using marker-assisted breeding strategies to select for, or against, specific TPS alleles.