This dissertation examines how different forms of state capacity affect the decision of terror groups to end their campaign. Building a theoretical framework about the relationship between state capacity and terrorist group termination, I address the following research questions: How do terror groups respond to the changes in non-repressive forms of state's capacity, such as bureaucratic capacity, extractive capacity, and how do those responses of terror groups affect the chance of their demise? How do the changes in non-repressive forms of state capacity affect the likelihood of termination of particular types of terror groups, specifically ethnic terror groups? And finally, how do security forces representing repressive capacity of states affect the probability of a terrorist group end? I argue that as the state fighting the terror group increases its capacity, that will generate an incentive for the terror group to respond to increasing state capacity to secure its survival and maintain its existence. As the terror group produces responses to increasing state capacity in terms of rebuilding its capacity to operate and keeping its popular support base intact, it will be less likely to end its terror campaign. This argument is particularly relevant for terror groups operating on behalf of …