Terrace Heights is a census-designated place (CDP) in Yakima County, Washington, United States.

As of the census[3] of 2007, there were 8,031 people, 3,754 households, and 2,005 families residing in the CDP.

The racial makeup of the CDP was 88.58% White, 0.84% African American, 1.13% Native American, 0.51% Asian, 0.02% Pacific Islander, 6.03% from other races, and 2.89% from two or more races.

There were 3,754 households, out of which 31.4% had children under the age of 18 living with them, 62.0% were married couples living together, 8.7% had a female householder with no husband present, and 26.0% were non-families.

20.9% of all households were made up of individuals, and 8.3% had someone living alone who was 65 years of age or older.