<p> A new terahertz-frequency (THz) relative positioning capability is developed and demonstrated in simulation for the formation flight of cargo aircraft. Formation flight is used by the military for a wide variety of applications. This work specifically considers the precision airdrop of personnel and supplies over hostile territory. During these operations, aircraft must maintain precise relative positioning; however, the current technology is flawed because radio signals are easy to detect and GPS is easily jammed. We propose using THz signals, the unique propagation properties of which provide both stealth and robustness to jamming. THz is a nascent technology with growing interest, particularly for high-speed wireless communications. To the author&rsquo;s knowledge, this is the first exploration of its potential for positioning. This dissertation develops methods for the measurement of range and bearing angle from the THz signal and a communication scheme to transmit altitude measurements over the THz link. These measurements are then fused together in a Kalman filter to estimate the aircrafts&rsquo; relative positions. Results from an integrated simulation demonstrate that the THz system is capable of precisely measuring the position, with cross-track errors of 11 m, two-sigma, at separations of 2 km, well within the 50 m requirements for the precision airdrop application.</p><p>