Species of the Santalum genus are well known for their fragrant hardwood, which has great value in medicinal, pharmaceutical and cosmetic industries. Sandalwood oil is derived from the heartwood of Santalum sp. and contains α-, β- and epi-β-santalols, which are responsible for its pleasant fragrance. Oil content can vary from species to species. Pressure on natural populations due to habitat loss, legal and illegal harvesting and disease is increasing. This paper highlights the development of molecular markers for the refinement of phylogenetic studies, identification of various Santalum and adulterant species, assessment of genetic diversity, genetic differentiation, clonality and management units within species, and for marker-assisted breeding. The identification of quantitative trait loci for sandal spike disease and for other traits such as specific rare secondary metabolites in the essential oil and related to its fragrance, would also benefit from molecular advances. RNA sequence analyses have already identified changes in gene expression and metabolic pathways in developing Santalum album L. haustoria.