A slow-wave structure (SWS) composed of a grating inside a rectangular waveguide is adopted as the circuit of the backward wave oscillator (BWO) in terahertz regime in this paper. Its dispersion curves and interaction impedance are presented by an analytical method and three-dimensional (3-D) electromagnetic software. The results by analysis and simulation agree well. By optimization, a BWO with the SWS at a central frequency 340 GHz is fully verified by 3-D particle-in-cell (PIC) code. The BWO is demonstrated with more than 100 mW output power at very low current density and 30 GHz tuning bandwidth.