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In this paper, the original spatial correlation wavelet denoising has been improved and applied to analyze the data of terahertz time-domain spectroscopy (THz-TDS). The improved algorithm has introduced the conception of threshold coefficient and a suitable threshold to end iteration process of algorithm. Then introduce the scale discriminate coefficient and obtain the adaptive coefficient according to that the noise and signal modulus maxima has different changes with the increasing scale. The experiment result shows that the algorithm based on improved spatial correlation denoising can not only reduce the number of iteration to save computation time, but also improve the measuring precision of THz-TDS effectively.