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Abstract Terahertz (THz) technology is critical for quantum material physics, biomedical imaging, ultrafast electronics, and next‐generation wireless communications. However, standing in the way of widespread applications is the scarcity of efficient ultrafast THz sources with on‐demand fast modulation and easy on‐chip integration capability. Here the discovery of colossal THz emission is reported from a van der Waals (vdW) ferroelectric semiconductor NbOI₂. Using THz emission spectroscopy, a THz generation efficiency an order of magnitude higher than that of ZnTe, a standard nonlinear crystal for ultrafast THz generation is observed. The underlying generation mechanisms associated are further uncovered with its large ferroelectric polarization by studying the THz emission dependence on excitation wavelength, incident polarization, and fluence. Moreover, the ultrafast coherent amplification and annihilation of the THz emission and associated coherent phonon oscillations by employing a double‐pump scheme are demonstrated. These findings combined with first‐principles calculations, inform a new understanding of the THz light–matter interaction in emergent vdW ferroelectrics and pave the way to develop high‐performance THz devices on them for quantum materials sensing and ultrafast electronics.