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Terminal servers (not to be confused with "terminal services," discussed under the next heading) can connect large numbers of terminals to mainframe or minicomputer systems over a LAN (local area network). The terminals are attached to the terminal server via RS-232 serial interfaces, and the terminal server is connected to an Ethernet or token ring network. The network then serves as the link between the host system and the terminals. A terminal server is basically an asynchronous multiplexer that connects not only terminals but computers, modems, printers, and other peripherals to the host system. The terminal server has a number of serial ports and the appropriate network interface.

Terminal servers are not gateways because the attached terminal devices are using a communication protocol that is compatible with the host. When a personal computer is attached to a host through a terminal server, it runs a terminal emulation program that lets it mimic the communication protocols of a terminal. Note, however, that the terminal server does encapsulate data from terminals for transport over the network to the host system.

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