Terboven was born in Essen, the son of minor landed gentry. He served for the German field artillery and nascent air force in World War I and was awarded the Iron Cross. He was dishonorably discharged as a lieutenant. He studied law and political science for a few years at the universities of Munich and Freiburg, where he first got involved in extremist politics. He worked as an apprentice at a bank for a few years before being laid off in 1925.
This set the stage for an active career in the Nazi party. Terboven helped establish the party in Essen and became Gauleiter there in 1928. He was part of the Sturmabteilung from 1925. He was made Oberpräsident der Rheinprovinz in 1935 and earned a reputation as a petty and ruthless ruler of the area.
He was made Reichskommissar (Commissary) of Norway on April 24, 1940, when it became obvious that a more authoritarian administration was needed in Norway. He moved into the Norwegian crown prince's residence in Skaugum and made the Norwegian parliament's buildings his headquarters.
Although the Nazi authorities instituted a puppet Norwegian regime through the Quisling cabinet, he ruled Norway as if he were dictator. He did not have authority over regular German armed forces in Norway (sometimes as many as 400,000 men), but commanded a force of 6,000, of which 800 were part of the secret police. His aspiration was to set up Fortress Norway that would be the last stand for the Nazi regime. He also planned to set up a concentration camp in Norway, all plans that came to nothing.
Terboven was much hated among Norwegians and earned little respect among his allies. He committed suicide a little past 11 p.m., May 8, 1945, by detonating dynamite in his bunker hideout on the Skaugum compound. Terboven blew himself up in the company of the body of the commander of the SS in Norway, General Rediess, who had shot himself at Skaugum in the early hours that same day.