The addition of the O-linked N-acetylglucosamine (O-GlcNAc) is a significant modification for active molecules, such as proteins, carbohydrates, and natural products. However, the synthesis of terpenoid glycoside derivatives decorated with GlcNAc remains a challenging task due to the absence of glycosyltransferases, key enzymes for catalyzing the transfer of GlcNAc to terpenoids. In this study, we demonstrated that the enzyme mutant UGT74AC1T79Y/L48M/R28H/L109I/S15A/M76L/H47R efficiently transferred GlcNAc from uridine diphosphate (UDP)-GlcNAc to a variety of terpenoids. This powerful enzyme was employed to synthesize GlcNAc-decorated derivatives of terpenoids, including mogrol, steviol, andrographolide, protopanaxadiol, glycyrrhetinic acid, ursolic acid, and betulinic acid for the first time. To unravel the mechanism of UDP-GlcNAc recognition, we determined the X-ray crystal structure of the inactivated mutant UGT74AC1His18A/Asp111A in complex with UDP-GlcNAc at a resolution of 1.66 Å. Through molecular dynamic simulation and activity analysis, we revealed the molecular mechanism and catalytically important amino acids directly involved in the recognition of UDP-GlcNAc. Overall, this study not only provided a potent biocatalyst capable of glycodiversifying natural products but also elucidated the structural basis for UDP-GlcNAc recognition by glycosyltransferases.