Yarrow (Achillea millefolium) is a medicinal plant from the Asteracea which biosynthesize different secondary metabolites especially terpenes and phenylpropanoids. To improve our understanding of the regulatory mechanisms behind the biosynthesis of these compounds we analyzed the expression of some genes associated with the biosynthesis of terpenes and phenylpropanoids in different tissues and in response to trans-cinnamic acid (tCA) as an inhibitor of PAL activity. Isolation and expression analysis of DXR, GPPS, PAL and CHS genes together with linalool synthase (LIS) as monoterpene synthase was conducted in different developmental stages of leaves, flowers and in response to trans-cinnamic acid (tCA). Differential expression of these genes observed in different tissues. tCA up-regulated the biosynthetic genes of monterpenes and down-regulated the biosynthetic genes of phenylpropanoids. Gene expression analysis in intact leaves and leaves without glandular trichomes showed that DXR, LIS, PAL and CHS are highly expressed in glandular trichomes while GPPS expressed ubiquitously. Analysis of essential oils composition showed that sesquiterpenes and monoterpenes are main compounds; in which from 57 identified compounds the highest were germacreneD (% 11.5), guaiol (%10.38), spatulenol (%8.73) and caryophyllene oxide (%7.48).