Terahertz time-domain spectroscopy (THz-TDS) systems based on ultra-high repetition rate mode-locked laser diodes (MLLDs) and semiconductor photomixers show great potential in terms of a wide bandwidth, fast acquisition speed, compactness, and robustness. They come at a much lower total cost than systems using femtosecond fiber lasers. However, to date, there is no adequate mathematical description of THz-TDS using a MLLD. In this paper, we provide a simple formula based on a system-theoretical model that accurately describes the detected terahertz spectrum as a function of the optical amplitude and phase spectrum of the MLLD and the transfer function of the terahertz system. Furthermore, we give a simple yet exact relationship between the optical intensity autocorrelation and the detected terahertz spectrum. We theoretically analyze these results for typical optical spectra of MLLDs to quantify the effect of pulse chirp on the terahertz spectrum. Finally, we confirm the validity of the model with comprehensive experimental results using a single-section and a two-section MLLD in a conventional THz-TDS system.