The harmonic confocal gyrotron with nonuniform electron beam is proposed in this paper in order to develop compact and high power terahertz radiation source. A 0.56 THz third harmonic confocal gyrotron with a dual arc section nonuniform electron beam has been designed and investigated. The studies show that confocal cavity has extremely low mode density, and has great advantage to operate at high harmonic. Nonuniform electron beam is an approach to improve output power and interaction efficiency of confocal gyrotron. A dual arc beam magnetron injection gun for designed confocal gyrotron has been developed and presented in this paper.