The cape is located 16 kilometres to the west of Wellington, the capital city of New Zealand. Ohau Point, located on the northern tip of Cape Terawhiti and, along with Perano Head on Arapaoa Island in the Marlborough Sounds, marks the narrowest part of Cook Strait.
It is also the closest point in the North Island to the South Island, with West Head, at the mouth of the Tory Channel being only 28 kilometres away (this point in the South Island lies to the northwest of Cape Terawhiti).
Cape Terawhiti, from which historic Terawhiti Station gets its name, came into being through a misconception of Captain Cook’s Tahitian interpreter, Tupaea. When, in 1769, Cook asked what the land in the east was, the local Maori replied simply, 'the east'. In fact Te Ra-whiti (The Rising Sun) is the general Maori term for the East Coast of the North Island. Omere is said to be the original name of Cape Terawhiti.
At the southern end of Cape Terawhiti is Oteranga Bay, the termination point for the inter-island Cook Strait power cable. The proper name for the bay is Oterongo.
Gold was found near Cape Terawhiti in 1862 and was mined for several years.