The increasing demand for higher data rates in wireless communications is shifting attention towards frequencies above 100 GHz. Future indoor wireless communication systems will have to support data rates of tens of Gbps and will need very large bandwidths. They might be accommodated in the THz range, i.e. between 100 GHz and 1 THz.In this dissertation propagation aspects relevant for future communications at THz frequencies are studied and subsequently, performance study of future indoor wireless communication systems at the frequencies beyond 100 GHz is conducted. Propagation effects, both in bound and unbound media are investigated in the range between 100 GHz and 1000 GHz. They encompass the atmospheric effects as well as the interactions of THz waves with material media. In particular, electrical material parameters of a range of common building materials are characterized. Furthermore, the properties of specular reflections from optically thick smooth materials, multiple reflections from multilayer or optically thin smooth materials and diffuse reflections from optically thick rough materials are investigated. The results of the propagation studies lay ground for the development of the concept of operation of future THz communication systems. It is shown that in order to compensate for the high transmission losses, highly directive antennas will be needed for both the transmitter and the receiver, with antenna gains around 30 dB. Consequently, the concept of directed NLOS transmissions with reflections off the walls, ceiling, windows and other objects is developed. While LOS transmissions will be preferable in unobstructed conditions, high degree of robustness to shadowing in both dynamic and static scenarios will be provided only by the directed NLOS paths with reflections off different indoor objects. Generally poor reflective properties of common indoor structural objects in the THz range can be enhanced with omni-directional dielectric mirrors. If applied at the right positions, they can greatly improve the signal coverage in NLOS scenarios. Finally, performance of future THz communication systems is studied in an integrated simulation environment, in which realizable THz hardware parameters and realistic channel conditions are employed in order to determine achievable data rates in a variety of application scenarios.