A novel mechanism of cascaded parametric oscillation is proposed in this paper to solve the problem of low-efficiency in terahertz (THz) parametric oscillation. The cascaded parametric oscillation is theoretically analyzed based on PPLN crystal as an example. The tuning characteristics of the THz wave, which are affected by the parameters of pump wavelength, poling period of PPLN and operating temperature, are investigated. The characteristics of THz gain and absorption are deduced in the case of collinear interaction of the three mixing waves. The results indicate that the THz conversion efficiency can be greatly enhanced and the widely tunable THz wave can be realized in cascaded parametric oscillation. The experiment on cascaded parametric oscillation generating high-efficiency, wide-tuning, narrow-linewidth, continuous THz wave is designed based on the analysis above.