The canker-causing fungus Seiridium cardinale is the major threat to Cupressus sempervirens worldwide. We investigated the production of terpenes by canker-resistant and susceptible cypresses inoculated with S. cardinale, the effect of these terpenes on fungal growth, and the defensive biotransformation of the terpenes conducted by the fungus. All infected trees produced de novo terpenes and strongly induced terpenic responses, but the responses were stronger in the canker-resistant than the susceptible trees. In vitro tests for the inhibition of fungal growth indicated that the terpene concentrations of resistant trees were more inhibitory than those of susceptible trees. The highly induced and de novo terpenes exhibited substantial inhibition (more than a fungicide reference) and had a high concentration-dependent inhibition, whereas the most abundant terpenes had a low concentration-dependent inhibition. S. cardinale biotransformed three terpenes and was capable of detoxifying them even outside the fungal mycelium, in its immediate surrounding environment. Our results thus indicated that terpenes were key defences efficiently used by C. sempervirens, but also that S. cardinale is ready for the battle.