This proposal provides a breakthrough solution to realize a compact THz local-oscillator, which is phase-lockable and can tune 1-2 THz with flat output power in excess of 100 mW. The innovation is based on high efficiency intra-cavity difference frequency generation. A dual cavity optical parametric oscillator (OPO) is designed to generate two phase-locked optical beams with orthogonal polarizations, which share an EO crystal inside the OPO cavity for THz generation. The frequency difference of the two optical wavelengths can be tuned by changing the phase matching condition of either one of the sub-OPOs. The package size of the local oscillator can be designed smaller than 50x40x20 cm3. The power consumption is <20 W. In Phase I, the feasibility will be demonstrated in a prototype and the system design will be optimized. A fully functional phase-lockable THz local-oscillator with unprecedented performance is anticipated in Phase II.