What engine does Terraria use?
It's XNA. Honestly, it's kinda cool how they pulled off such a great game without using a mainstream game engine.
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Terraria was developed with the XNA framework by Microsoft. This framework is pretty versatile and was a popular choice for indie game devs around the time Terraria was made. Basically, it's not an 'engine' like Unity or Unreal, but a framework that offers a lot of flexibility for game development!
XNA all the way, baby! No fancy engines, just good old Microsoft XNA framework. Terraria shows you don't need the latest tech to make an awesome game.
馃憖 If you like Terraria...
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