Ted's wit is terribly warped (7)
I believe the answer is:
twisted
'warped' is the definition.
(thesaurus)
'ted's wit is terribly' is the wordplay.
'is terribly' indicates anagramming the letters.
'teds'+'wit'='tedswit'
'tedswit' is an anagram of 'TWISTED'.
(Other definitions for twisted that I've seen before include "Distorted; cheated" , "Danced" , "Twirled, wound" , "Bent, distorted" , "Wound or wrapped around" .)