To test the proposition that regime type is linked to terrorism, and therefore that democracy may be an effective counterterrorism tool, this study employs a statistical analysis on incidents of terrorism from 143 countries over the period of 2004 to 2009. The overarching hypothesis put forth is that democracy is negatively related to the incidence of terrorism. Specifically, democratic states as victims of terrorism tend to experience fewer incidents of terrorism and suffer fewer fatalities as a result of terrorist acts than autocratic states. The results indicate statistically significant correlations between regime type and terrorism, and provide strong evidence to reject the null hypothesis. In particular, the data show that democracy, measured by both aggregate-level regime type and specific democratic characteristics such as a strong human rights record, is negatively associated with terrorism. These findings reveal that democracy has the potential to be used as an effective counterterrorism tool, particularly with regard to undermining the breeding causes of terrorism.