Each subcellular compartment in yeast offers a unique physiochemical environment and metabolite, enzyme, and cofactor composition. While yeast metabolic engineering has focused on assembling pathways in the cell cytosol, there is growing interest in embracing subcellular compartmentalization. Beyond harnessing distinct organelle properties, physical separation of organelles from the cytosol has the potential to eliminate metabolic crosstalk and enhance compartmentalized pathway efficiency. In this Perspective we review the state of the art in yeast subcellular engineering, highlighting the benefits of targeting biosynthetic pathways to subcellular compartments, including mitochondria, peroxisomes, the ER and/or Golgi, vacuoles, and the cell wall, in different yeast species. We compare the performances of strains developed with subcellular engineering to those of native producers or yeast strains previously engineered with cytosolic pathways. We also identify important challenges that lie ahead, which need to be addressed for organelle engineering to become as mainstream as cytosolic engineering in academia and industry.