Terahertz quantum cascade laser sources based on intra-cavity difference-frequency generation are currently the only room-temperature mass-producible diode-laser-like emitters of coherent 1–6 THz radiation. Device performance has improved dramatically over the past few years to reach milliwatt-level power output and broad tuning from 1.2 to 5.9 THz, all at room-temperature. Terahertz output in these sources originates from intersubband optical nonlinearity in the laser active region. Here we report the first comprehensive spectroscopic study of the optical nonlinearity and investigate its dependence on the mid-infrared pump frequencies. Our work shows that the terahertz generation efficiency can vary by a factor of 2 or greater depending on the spectral position of the mid-infrared pumps for a fixed THz difference-frequency. We have also measured for the first time the linewidth for transitions between the lower quantum cascade laser states, which is critical for determining terahertz nonlinearity and predicting optical loss in quantum cascade laser waveguides.