β-Caryophyllene is a plant terpenoid with therapeutic and biofuel properties. Production of terpenoids through microbial cells is a potentially sustainable alternative for production. Adaptive laboratory evolution is a complementary technique to metabolic engineering for strain improvement, if the product-of-interest is coupled with growth. Here we use a combination of pathway engineering and adaptive laboratory evolution to improve the production of β-caryophyllene, an extracellular product, by leveraging the antioxidant potential of the compound. Using oxidative stress as selective pressure, we developed an adaptive laboratory evolution that worked to evolve an engineered β-caryophyllene producing yeast strain for improved production within a few generations. This strategy resulted in fourfold increase in production in isolated mutants. Further increasing the flux to β-caryophyllene in the best evolved mutant achieved a titer of 104.7 ± 6.2 mg/L product. Genomic analysis revealed a gain-of-function mutation in the a-factor exporter STE6 was identified to be involved in significantly increased production, likely as a result of increased product export. An optimized selection strategy based on oxidative stress was developed to improve the production of the extracellular product β-caryophyllene in an engineered yeast strain. Application of the selection strategy in adaptive laboratory evolution resulted in mutants with significantly increased production and identification of novel responsible mutations.