Terfenol-D was invented by the US Navy as the next-generation active material for active SONAR. Several different applications have been developed for hull-mounted, towed, and off-board sources. In general, the performance of tonpilz transducers and flextensionals has been improved through the use of Terfenol-D, increasing bandwidth and low frequency performance while reducing transducer size and weight by a factor of three.

Terfenol-D is the core active material in the Sea TalonTM system provided to the Navy by the Lockheed-Martin Corporation.

Direct replacement of PZT in flextensionals (FSP's ) results in a 10 dB increase in power and a 10-20% decrease in resonant frequency. Major benefits of Terfenol-D in sonar applications are its higher energy density and performance, lower speed of sound resulting in smaller transducers, and ruggedness for longer life. Specific benefits cannot be listed as they are either proprietary and/or classified.

Hybrid PZT-Terfenol transducers have also been developed in order to utilize unique characteristics of each. One specific dual-resonant hybrid tonpilz transducer improved low frequency performance and increased bandwidth as compared to the existing TR343 used by the US Navy. Another hybrid design recently developed has a several octave bandwidth at very high SPL in a small package.