In this paper, a new kind of terahertz oscillator is presented using plasma wave excitation in a resonant tunnel diode (RTD) gated high electron mobility transistor (HEMT). The plasma wave arising from the RTD-gated HEMT is equivalent to active transmission lines and induces negative differential conductance (NDC) of the oscillator. The proposed RTD-gated HEMT oscillator is more compact and has higher oscillation frequency than the transmission line loaded traditional RTD oscillator duo to plasma wave effect. This paper analyses and calculates the oscillation conditions, the relationships between device structures, oscillation frequency and the output power of the oscillator. The presented work may provide a new concept for fabricating terahertz oscillator.