Erdogan arrived in Bosnia accompanied by more than 100 business people.
After his talks with Terzic and a Bosnian government delegation, Erdogan told the press Turkish business people were very interested in investing in Bosnia. He urged removing red tape.
Terzic said his cabinet was willing to do everything to attract foreign investment, including from Turkey.
The two prime ministers also discussed Turkey's and Bosnia's Euro-Atlantic integration. They voiced mutual support for admission to NATO and the European Union.
Erdogan refuted allegations that his government is preparing to introduce visas for Bosnian citizens, but said visas would be introduced if that was one of the conditions once Turkey began EU entry talks on October 3.
Erdogan and the Turkish delegation will visit the southern city of Mostar on Thursday.