Graphene is a single layer of covalently bonded carbon atoms, which was discovered only 8 years ago and yet has already attracted intense research and commercial interest. Initial research focused on its remarkable electronic properties, such as the observation of massless Dirac fermions and the half-integer quantum Hall effect. Now graphene is finding application in touch-screen displays, as channels in high-frequency transistors and in graphene-based integrated circuits. The potential for using the unique properties of graphene in terahertz-frequency electronics is particularly exciting; however, initial experiments probing the terahertz-frequency response of graphene are only just emerging. Here we show that the photoconductivity of graphene at terahertz frequencies is dramatically altered by the adsorption of atmospheric gases, such as nitrogen and oxygen. Furthermore, we observe the signature of terahertz stimulated emission from gas-adsorbed graphene. Our findings highlight the importance of environmental conditions on the design and fabrication of high-speed, graphene-based devices.