Combat is one of the main selling points of TERA, and what made the game special compared to other games.

Traditional MMORPGs use something called "tab-targeting". In those games player selects target by pressing tab key on keyboard, then attacks that target by casting skills. Also player has to stay somewhat close to target to hit. Then skill has change to hit or miss target by dice roll or RNG.

Not in TERA. TERA is advertised as with its "action-combat battle system"; player must aim their combat skills to hit a target. Also player can use defensive skills such as dodges or even blocking skills, and positioning to gain the upper hand in battle.

This style is described as a hybrid of RPG and FPS (first person shooter) combat. Although TERA combat might also be said to take elements from Beat 'em up games. Iframes (invulnerability frames) are important concept adopted from these games. Iframe can make player invulnerable damage up to two seconds, which allows them dodge or avoid special attacks.

TERA uses standard RPGs game mechanics like hitpoints for health and mana as resource for casting skills. Game features skill rotations familiar from other MMORPGs. Skills have cooldown times and other skills must be used while skill is not available. Certain skills have combos, and must be cast in order for maximum benefit. Certain classes also collect some resource points to unleash their most powerful attacks.

TERA has quite advanced system for PvP. Player can end up in multiple states like knocked down, staggered, stunned or even in sleep, unable to defend themselves.

Damage dealing in PVE combat like in dungeons depends heavily on critical hits. Critical hit happens when attack randomly "crits" dealing additional damage. What player can do is to maximize the chance of critical hits by raising their Crit Rate stat with various means. In addition power of critical hit (crit power) is maximized. At certain point (crit cap) critical rate of skills reaches 100% after which adding critical rate has no effect. Other stat player may choose is power, which gives linear raise to damage attacks deal. Question of optimal critical rate / power ratio is subject of lengthy research among player community.