A novel two-beam folded waveguide (FW) oscillator is presented for the purpose of gaining higher power with a small-size circuit compared with the normal FW oscillator. The high-frequency characteristics of the two-beam FW, including dispersion and interaction impedance, were investigated by the numerical simulation and compared with the one-beam FW. The radio-frequency loss of the two-beam FW was also analyzed. A 3-D particle-in-cell code CHIPIC was applied to analyze and optimize the performance of a G-band two-beam FW oscillator. The influences of the distance between the two beam tunnels, beam voltage, the number of periods, magnetic field, radius of beam tunnel, and the packing ratio on the circuit performance are investigated in detail. Compared with a one-beam circuit, a larger output power of the two-beam circuit with the same beam power was observed by the simulation. Moreover, the start-oscillation current of two-beam circuit is much lower than the one-beam circuit with better performance. It will favor the miniaturized design of the high-power terahertz oscillator.