Abstract: High power generation in terahertz frequency band is limited by physical mechanism. A G-band sheet beam extended-interaction klystron was designed to demonstrate the power level and the physical factors that affect the performance of the klystron. An elliptical electron beam with a voltage of 24.5 kV, a current of 0.6 A and the dimension of 1 mm×0.15 mm was used. To match the size of the sheet beam and obtain high efficiency and high gain, the transverse-oversized barbell type multi-gap resonant cavity was used as the interaction circuit. The 3D PIC simulation results show that more than 500 W of power output can be obtained with the actual cavity loss considered, and the electron efficiency and gain are 3.65% and 38.2 dB respectively. It is found that the power and efficiency are largely restricted by the mode stability of the multi-gap cavity as well as the ohmic loss. The ohmic loss of the output cavity has a significant effect on the final output power which should be given special consideration in engineering design. The research in this paper has laid a good foundation for the development of high frequency sheet beam extended-interaction devices.