Substrate inhibition of enzymes can be a major obstacle to the production of valuable chemicals in engineered microorganisms. Here, we show substrate inhibition of lycopene cyclase as the main limitation in carotenoid biosynthesis in Yarrowia lipolytica. To overcome this bottleneck, we exploit two independent approaches. Structure-guided protein engineering yields a variant, Y27R, characterized by complete loss of substrate inhibition without reduction of enzymatic activity. Alternatively, establishing a geranylgeranyl pyrophosphate synthase-mediated flux flow restrictor also prevents the onset of substrate inhibition by diverting metabolic flux away from the inhibitory metabolite while maintaining sufficient flux towards product formation. Both approaches result in high levels of near-exclusive β-carotene production. Ultimately, we construct strains capable of producing 39.5 g/L β-carotene at a productivity of 0.165 g/L/h in bioreactor fermentations (a 1441-fold improvement over the initial strain). Our findings provide effective approaches for removing substrate inhibition in engineering pathways for efficient synthesis of natural products.