Defending Qatar champion Terpstra won the stage over former time trial world champion Fabian Cancellara (Trek) by an astounding eight seconds over a short and punchy 10.9-kilometre route.
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Current time trial world champion Bradley Wiggins (Sky) finished in third place, nine seconds adrift of Terpstra.
World time trial champion Bradley Wiggins beaten by Niki Terpstra and Fabian Cancellara
Fellow British riders Ian Stannard and Luke Rowe (both Sky) also rode well, placing fourth and 15th respectively. Stannard is now placed third overall behind Terpstra and Maciej Bodnar (Tinkoff-Saxo).
Rowe also moves into the top 10 overall in fifth, and received the white jersey of best young rider for his efforts.
The six-stage Tour of Qatar concludes on Friday, with the riders now tackling a succession of flat, open road stages that will likely be shaped by the winds blowing out of the surrounding desert.