Summary: The underlying physics of the generation and detection of terahertz (THz) waves in gases are described. The THz wave generation process takes place in two steps: asymmetric gas ionization by two-frequency laser fields, followed by interaction of the ionized electron wave packets with the surrounding medium, producing an intense ’echo’ with tunable spectral content. In order to clarify the physical picture at the moment of ionization, the laser-atom interaction is treated through solution of the time-dependent Schrödinger equation, yielding an ab initio understanding of the release of the electron wave packets. The second step, where the electrons interact with the surrounding plasma is treated analytically. The resulting pressure dependence of the THz radiation is explored in detail. The THz wave detection process is shown to be the result of four-wave mixing, leading to analytical expressions of the signal obtained which allow for improved optimization of systems that exploit these effects.