To settle the THz image degradation problem, we propose an effective enhancement method based on the physical model and multiscale retinex (MSR) algorithm. The overall enhancing process involves two parts: reconstruction and enhancement. Firstly, the original THz images are reconstructed by a mathematical model, which is built and considered the THz absorption variate and Gaussian distribution of the beam. Then, the original images are processed by the proposed algorithm, which is combined the atmospheric scattering model and optimized MSR algorithm. The proposed algorithm not only recover the image scene radiance and remove haze, but also can make a compromise of the dynamic range of grayscale and edge enhancement of image. Results on a variety of THz images demonstrate our method can effectively improve the quality of THz images and retain sufficient image details.