Subcellular organelles in eukaryotes are unique and specialized physiochemical compartments that separate specific metabolic reactions from the rest of the cytosol, control an intricate metabolic network, and allow the cells to perform specific functions more efficiently. Recently, inspired by this compartmentalization strategy of cells, metabolic compartmentalization has received much attention from researchers in the fields of metabolic engineering and synthetic biology for transforming subcellular organelles into microfactories for the production of valuable chemicals. Here, we provide an overview of recent advances in yeast subcellular compartmentalization, highlighting the benefits of confining metabolic pathways spatially within particular subcellular organelles, including the endoplasmic reticulum, lipid droplets, mitochondria, peroxisomes, and cell walls. In addition to metabolic compartmentalization, we review emerging strategies for organelle engineering that have proven to be successful for overcoming the inherent capacity and volume constraints of organelles, thereby boosting the performance of the compartmentalized pathways. We also describe and compare various instances in which engineered organelles have been explored as compartments for biotechnological exploitation.