Terahertz radiation falls within the spectrum of hydrogen bonding, molecular rotation, and vibration, as well as van der Waals forces, indicating that many biological macromolecules exhibit a strong absorption and resonance in this frequency band. Research has shown that the terahertz radiation of specific frequencies and energies can mediate changes in cellular morphology and function by exciting nonlinear resonance effects in proteins. However, current studies have mainly focused on the cellular level and lack systematic studies on multiple levels. Moreover, the mechanism and law of interaction between terahertz radiation and neurons are still unclear. Therefore, this paper analyzes the mechanisms by which terahertz radiation modulates the nervous system, and it analyzes and discusses the methods by which terahertz radiation modulates neurons. In addition, this paper reviews the laws of terahertz radiation’s influence on neuronal morphology and kinetic properties and discusses them in detail in terms of terahertz radiation frequency, energy, and time. In the future, the safety of the terahertz radiation system should be considered first to construct the safety criterion of terahertz modulation, and the spatial resolution of the terahertz radiation system should be improved. In addition, the systematic improvement of the laws and mechanisms of terahertz modulation of the nervous system on multiple levels is the key to applying terahertz waves to neuroscience. This paper can provide a platform for researchers to understand the mechanism of the terahertz–nervous system interaction, its current status, and future research directions.