This study examines whether the imposition of economic sanctions has relation to an increase in domestic terrorism, postulating that when sanctions impair the economic functioning of the target country, feelings of bitterness and despair are intensified among the poor who may then lash out by turning to domestic terrorism. A cross-sectional, time-series data analysis of 152 countries over the past three decades provides evidence that ceteris paribus, economic sanctions are positively associated with the incidence of domestic terror, this effect remains when reverse causality is taken into account. In order to clarify the role of poverty in this association, this study also introduces a two-step analysis in which sanctions are first considered a cause of poverty, and then predicted poverty levels are used to predict the occurrence of terrorism. This test for robustness confirms that economic sanctions do indeed lead to a rise in the rate of domestic terrorism.