Key Message Distinct catalytic features of the Poaceae TPS-a subfamily arose early in grass evolution and the reactions catalyzed have become more complex with time. Abstract The structural diversity of terpenes found in nature is mainly determined by terpene synthases (TPS). TPS enzymes accept ubiquitous prenyl diphosphates as substrates and convert them into the various terpene skeletons by catalyzing a carbocation-driven reaction. Based on their sequence similarity, terpene synthases from land plants can be divided into different subfamilies, TPS-a to TPS-h. In this study, we aimed to understand the evolution and functional diversification of the TPS-a subfamily in the Poaceae (the grass family), a plant family that contains important crops such as maize, wheat, rice, and sorghum. Sequence comparisons showed that aside from one clade shared with other monocot plants, the Poaceae TPS-a subfamily consists of five well-defined clades I–V, the common ancestor of which probably originated very early in the evolution of the grasses. A survey of the TPS literature and the characterization of representative TPS enzymes from clades I–III revealed clade-specific substrate and product specificities. The enzymes in both clade I and II function as sesquiterpene synthases with clade I enzymes catalyzing initial C10-C1 or C11-C1 ring closures and clade II enzymes catalyzing C6-C1 closures. The enzymes of clade III mainly act as monoterpene synthases, forming cyclic and acyclic monoterpenes. The reconstruction and characterization of clade ancestors demonstrated that the differences among clades I–III were already present in their ancestors. However, the ancestors generally catalyzed simpler reactions with less double-bond isomerization and fewer cyclization steps. Overall, our data indicate an early origin of key enzymatic features of TPS-a enzymes in the Poaceae, and the development of more complex reactions over the course of evolution. Electronic supplementary material The online version of this article (10.1007/s11103-020-01037-4) contains supplementary material, which is available to authorized users.