(noun) essentially another word for ass hole. The substitution of terry hole for ass hole is believed to have had it's origins on partypoker.com within the last two years.
1. Eating too many jalepenos could cause one's terry hole to burn upon movement of the bowels.
2. If this guy calls my aces, I'm going to rip him a new terry hole.
Another word for anus - usually used when the words asshole or butthole are considered innapropriate (but can be used whenever).
Honey, please make sure that little Johnny does a thorough job washing his terry hole tonight. Make sure that he scrubs it with a warm soapy washcloth. I just put clean sheets on his bed and I don't want any more foul sheet stains on account of that filthy little terry hole of his.