The bay on which Terney is located was discovered on June 23, 1787 by Jean-François de La Pérouse on his way from Manila to Avacha Bay along the coast of what he called "the Tartary of the Manchus" (la Tartarie de Mantcheoux) and named, in French, Baie de Ternai. It was here that the French explorers became convinced that the coast visited by Maarten Gerritsz Vries in the Castricum in 1643 (i.e., in fact, the east coast of Hokkaido and Sakhalin) was not the mainland, since they French were now at the same latitude as the Dutch had been a century and a half before, but the location looked entirely different. La Perouse's sailors were impressed with good fishing in the area. They explored the area around the bay, but did not see any live residents. They did, however, find a native grave, and upon opening it saw that the dead wore clothes made of Chinese fabrics and decorated with Chinese coins, which indicated that the local tribes had some commerce with the Chinese or Manchu.
The present Russian settlement was founded in September 1908.
Terney has a humid continental climate (Köppen Dfb), almost cold enough to be a subarctic climate (Dfc), which is most unusual for a place so far south and is due to the influence of the cold Oyashio Current which not only makes summers up to 6 °C (11 °F) cooler than in Harbin but also causes a marked seasonal lag, so the September is on average warmer than June. Despite the fairly heavy rainfall due to orographic influences from mountains near the Pacific, Terney is much sunnier than nearby localities on the Sakhalin Island.