A tunable nanosource of continuous wave terahertz (THz) radiation based on difference frequency generation is proposed and investigated. In this work, we extend and optimize surface plasmon-polariton waveguides to confine light to nanoscales. This new structure offers many advantages to produce more efficient THz waves with lower loss. The presented calculations for 0.6 THz indicate that THz efficiency is about three times larger (12×10−4W−1 from a 1-cm long device) with lower loss. Indeed, air gap distance variations to find the phase matching condition do not affect overlap factor.