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Graphene has long been predicted to show exceptional nonlinear optical properties, especially in the technologically important terahertz (THz) frequency range. Recent experiments have shown that this atomically thin material indeed exhibits possibly the largest nonlinear coefficients of any material known to date, paving the way for practical graphene‐based applications in ultrafast (opto‐)electronics operating at THz rates. Here the advances in the booming field of nonlinear THz optics of graphene are reported, and the state‐of‐the‐art understanding of the nature of the nonlinear interaction of graphene with the THz fields based on the thermodynamic model of electron transport in graphene is described. A comparison between different mechanisms of nonlinear interaction of graphene with light fields in THz, infrared, and visible frequency ranges is also provided. Finally, the perspectives for the expected technological applications of graphene based on its extraordinary THz nonlinear properties are summarized. This report covers the evolution of the field of THz nonlinear optics of graphene from the very pioneering to the state‐of‐the‐art works. It also serves as a concise overview of the current understanding of THz nonlinear optics of graphene and as a compact reference for researchers entering the field, as well as for the technology developers. [ABSTRACT FROM AUTHOR]