A method for simultaneously measuring the refractive index and absorption coefficient of nonlinear optical crystals in the ultra-wideband terahertz (THz) region is described. This method is based on the analysis of a collinear difference frequency generation (DFG) process using a tunable, dual-wavelength, optical parametric oscillator. The refractive index and the absorption coefficient in the organic nonlinear crystal DAST were experimentally determined in the frequency range 2.5-26.2 THz by measuring the THz-wave output using DFG. The resultant refractive index in the x-direction was ∼2.3, while the absorption spectrum was in good agreement with FT-IR measurements. The output of the DAST-DFG THzwave source was optimized to the phase-matching condition using the measured refractive index spectrum in THz region, which resulted in an improvement in the output power of up to a factor of nine.