The performances of GaN-based Gunn diodes have been studied extensively for more than two decades, however, the diverging electron drift velocity characteristics employed in these studies merit a review of the potential of GaN Gunn diodes as THz sources. A self-consistent analytical-band Monte Carlo (MC) model capable of reproducing the electron drift velocity characteristics of GaN predicted theoretically by the first-principles full band MC model is used in this work to evaluate systematically the performance of GaN Gunn diodes in transit time mode. The optimal fundamental frequency of a sustainable current oscillation under a DC bias is determined as a function of the length of its transit region. The MC model predicts a GaN Gunn diode with a transit length of 500 nm capable of operating at frequencies up to 625 GHz with an estimated output power of 3.0 W. An MC model takes into account the effect of defects in order to replicate the much lower electron drift velocity characteristics derived from experimental work and predicts THz signal generation of 2.5 W at highest sustainable operating frequency of 326 GHz in a Gunn diode with a transit length of 700 nm.