High power vacuum electronic devices of millimeter wave to terahertz regime are attracting extensive interests due to their potential applications in science and technologies. In this paper, the design and experimental results of a powerful compact oversized surface wave oscillator (SWO) in Y-band are presented. The cylindrical slow wave structure (SWS) with rectangular corrugations and large diameter about 6.8 times the radiation wavelength is proposed to support the surface wave interacting with annular relativistic electron beam. By choosing appropriate beam parameters, the beam-wave interaction takes place near the π-point of TM₀₁ mode dispersion curve, giving high coupling impedance and temporal growth rate compared with higher TM_0n modes. The fundamental mode operation of the device is verified by the particle-in-cell (PIC) simulation results, which also indicate its capability of tens of megawatts power output in the Y-band. Finally, a compact experimental setup is completed to validate our design. Measurement results show that a terahertz pulse with frequency in the range of 0.319–0.349 THz, duration of about 2 ns and radiation power of about 2.1 MW has been generated.