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The Terahertz (0.1-10 THz) band holds enormous potential for supportingunprecedented data rates and millimeter-level accurate sensing thanks to itsultra-broad bandwidth. Terahertz integrated sensing and communication (ISAC) isviewed as a game-changing technology to realize connected intelligence in 6Gand beyond systems. In this article, challenges from THz channel andtransceiver perspectives, as well as difficulties of ISAC are elaborated.Motivated by these challenges, THz ISAC channels are studied in terms ofchannel types, measurement and models. Moreover, four key signal processingtechniques to unleash the full potential of THz ISAC are investigated, namely,waveform design, receiver processing, narrowbeam management, and localization.Quantitative studies demonstrate the benefits and performance of thestate-of-the-art signal processing methods. Finally, open problems andpotential solutions are discussed.

THz ISAC: A Physical-Layer Perspective of Terahertz Integrated Sensing and Communication