Interest is increasing in high-power terahertz (THz) sources of radiation. The terminology is fluid, but researchers in the field typically refer to frequencies ranging from about 300 GHz to 10 THz as THz radiation. In this article, we present a description of design considerations for a compact, high-average power free-electron laser. At present, THz radiation is generated by a variety of mechanisms, including laser-based sources and electron-beam-based sources. We provide a short description of current THz source technology to give background against which to compare the present concept; however, this should not be considered a comprehensive discussion of such technologies.