This article investigates impact of the lack of civil liberties on terrorism in Middle Eastern and North African countries based on terrorism incidents per capita for the period 1998–2010. We control for endogeneity by using oil revenue, military expenditure and under-five mortality rate as instruments and find that we cannot reject the null hypothesis that civil liberties is exogenous. Our findings from exogenous models indicate that an improvement of civil liberties reduces domestic terrorism but not transnational terrorism. Apart from civil liberties, there is also evidence that rule of law decreases domestic terrorism. We also find that political stability reduces transnational terrorism.