Place a water reservoir in the base of the terrarium that is at least 2 inches deep. This reservoir can be just about any size, depending on your needs. However, a 6-inch container is sufficient for most terrariums. Small plastic food storage containers work well. Dig a hole in the dirt or make a hole in the rocks at the base of the terrarium for your container. Place the lip of the reservoir even with the top of the soil or rock level.
Place the water pump behind the reservoir and stack rocks around the pump. Pumps vary in shape and size, but if you are using a standard 10 to 20-gallon fish tank pump you need at least 6-inches worth of stones in height and 3-inches in width. Once the rocks are in a position you like, attach them to one another using caulk. Allow the caulk to dry overnight.
Place loose stones in the bottom of the reservoir. Stones hide the plastic and help limit the splashing since the water does not flow onto a flat surface.
Set up the water pump. Follow the manufacturer's set up instructions to ensure proper use.
Fill the reservoir with water. Ensure the end of the water pump is in the water before turning it on to start the waterfall. Adjust the placement of the pump by pulling it up or down in the water, as necessary, so that the water flows down the front of the rock feature.