The ability to control and concentrate electromagnetic (EM) energy in length scales much smaller than the excitation wavelength opens up new opportunities for sensing and NDE. Ordinarily EM wave transmission through such structures becomes infinitesimally small as the slit opening becomes much smaller than the wavelength; however, extraordinary transmission through these structures has been observed by researchers, which is believed to be due to surface plasmonic effect. We have investigated THz subwavelength slit structures for sensing and NDE. In a deep slit structure with subwavelength width, not only are the waves transmitted through, but also are found to be resonating because of the reflections caused by the impedance mismatch at the open ends. As a result, this structure can sense the dielectric properties of materials, which may be in gas, liquid, or solid forms, with high sensitivity and selectivity depending on the quality factor of the cavity resonance. Subwavelength aperture allows for near field imaging of materials with spatial resolution below the Abbe diffraction limit. To understand the electromagnetic (EM) wave propagation through subwavelength structures, we have performed a computational analysis of the EM fields with finite difference time domain (FDTD) technique. Simulated responses were compared with swept‐frequency cw THz waves (230–300 GHz) in straight and stepped cavities with 50 μm slits on both ends and increased width in the middle. FDTD modeling of straight slits indicated Fabry‐Perot (F‐P) resonance peaks with low quality factor. We modified the slit to form a stepped cavity which increased the quality factor because of increased reflection coefficient at the slit ends. We fabricated straight and stepped cavities and tested with THz radiation in the 250–300 GHz range. The stepped cavity appears to have desirable features for sensing: good transmissivity, high‐Q F‐P resonance, compactness, and ruggedness.