Since ginsenosides contained in the two herbs have different fingerprint spectra in the terahertz band, a method based on ginsenoside terahertz spectrum was proposed for the identification of ginseng and panax quinquefolium. The terahertz spectra of ginseng and panax quinquefolium were identified by MATLAB software, and the ginseng and panax quinquefolium were distinguished by the standard principal component analysis (PCA) according to their terahertz spectral characteristics. The results show that the principal component analysis based on terahertz spectrum can distinguish ginseng and panax quinquefolium accurately, and it can also be applied to other similar substances.