This paper presents a novel nanosource of continuous terahertz (THz) wave radiation based on difference frequency generation (DFG). Both the optical and THz waves are confined in a nanoscale plasmonic waveguide. The results of theoretical investigations indicate that the appropriate geometry of the plasmonic waveguide has a relatively long optical and THz propagation distance (on the order of several tens of wavelengths). Phase matching is obtained using the dispersive properties of the waveguide for generating 0.8 THz at the central optical wavelength of 1.52 μm. Our numerical calculation shows that the conversion efficiency in this waveguide structure can be achieved up to 5 times as large as the micron scale dielectric waveguides and almost 10 times as large as the metallic micron scale waveguides.