This paper discusses the principles of operation, state of the art, and future potential of active two-terminal devices for generation of low-noise, continuous-wave terahertz radiation. These devices use transit-time, transferred-electron, and quantum-mechanical effects (or a combination of them) to create a negative differential resistance (NDR) at the frequency of interest. Many different types of NDR devices have been proposed since the earliest days of semiconductor devices and studied in detailed simulations for their power generation potential, but have yet to be demonstrated experimentally. The paper focuses on NDR devices that not only yielded significant output powers at millimeter waves frequencies and higher, but also have the strong potential of generating radiation at terahertz frequencies. Examples of such NDR devices are resonant tunneling diodes (RTDs), superlattice electronic devices (SLEDs), and InP Gunn devices. Examples of their state-of-the-art results are output powers of 0.2 mW at 443 GHz and 5 μW at 1.53 THz from InGaAs/AlAs double barrier RTDs on InP substrate; 5.0 mW at 123.3 GHz, 1.1 mW at 155.1 GHz, and 0.52 mW at 252.8 GHz from GaAs/AlAs superlattice electronic devices on GaAs substrate; and 330 μW at 412 GHz, 86 μW at 479 GHz, and 18 μW at 502 GHz from InP Gunn devices.