The Extremely Low Frequency (ELF) method is a new artificial source electromagnetic detecting technique, which should be improved through forward modeling and data checking for the processing of the measured geophysical data. In this paper, the theory of the ELF method is systematically analyzed. First, in accordance with the studied objects and the problems, the geological structure model and its corresponding mathematical model are built. Then, on the basis of the electromagnetic theory and the selection of a suitable calculation method, the time-harmonic horizontal finitely long grounded wire is set on the crust surface, the mutual coupling of the ionosphere, the air layer and the layered earth are considered, and the general expressions for frequency-domain electromagnetic responses are deduced. These expressions connect electromagnetic response with all parameters such as the conductivity of the ionosphere, and provide theoretical foundation for forward modeling and the feasibility of the ELF method for resource exploration. The modeling indicates that the shape of the electromagnetic response curve is variable, and the electromagnetic waves are reflected back and forth between the ground and the ionosphere due to the existence of the ionosphere.