In this paper, we address multiple-input multiple-output (MIMO) communication technique based on generalized spatial modulation (GSM) and dual-polarized (DP) antennas in sub-TeraHertz (sub-THz) bands to improve the Spectral Efficiency (SE) and to reduce the spatial correlation effect, and the space occupancy. The proposed system adds the polarization dimension to the conventional GSM scheme and enhance the SE. Moreover, the joint Maximum Likelihood (ML) detector and a Modified Ordered Block Minimum Mean-Squared Error (MOB-MMSE) detector algorithm is proposed to detect jointly the complex symbols and the virtual bits conveyed by the activated polarization and the transmit antenna combination index. MOB-MMSE can achieve near-ML performance with low complexity. The performance of DP-GSM system over (un)correlated Rayleigh/Rician fading and sub-THz channels has been studied and the results show that DP-GSM system is robust against channel deficiency such as Rician fading and spatial correlation. Moreover, the Dual polarized Spatial Multiplexing (DP-SMX) and the Uni-Polarized GSM (UP-GSM) are compared with the DP-GSM system. The results reveal that DP-GSM with low order modulation schemes as QPSK outperforms the DP-SMX at high spatial correlations, and thus it is a promising candidate for ultra-high wireless data rates communication in sub-THz band.