This study offers fresh empirical insights into the causes of terrorism in Pakistan. The authors present a novel strategy for hypothesis building in conflict studies, and explore the importance of the explanatory variables within the time frame of the analysis. The hypothesized relationships are tested using pooled cross-section time series data from five regions of Pakistan (the federally controlled area and four provinces from 1980 to 2010) using fixed effect negative binomial regression. The results indicate that public education expenditures, law & order expenditures, ethnic diversity, urban population, the presence of domestic military operations, and U.S. military aid to Pakistan all result in increased terrorist activity in Pakistan. This study recommends that ethnic diversity and multilingualism be respected in education in Pakistan, that the educational curriculum be cleansed of systemic incendiary language and bigotry, that law enforcement agencies be freed of political control, and that strateg...