This study extends selectorate theory in the form of an agent-based model to explore how the leader’s ethnic policy—ethnic exclusion or inclusion—influences the risk of rebellion and leader survival in different sizes of the minimum winning coalition. The theoretical simulation shows that when the minimum winning coalition is small, (1) highly exclusive leaders not only survive longer in power but also face a lower risk of violent removal from office than moderately exclusive leaders; (2) leaders who pursue an inclusive ethnic policy are more likely to be overthrown by disaffected members of the ruling coalition; and (3) there is an inverted U-shaped relationship between the level of ethnic exclusion and the risk of rebellion, with the greatest risk of rebellion among semiexclusive regimes. These findings indicate that an exclusive ethnic policy provides political benefits to nondemocratic leaders even if it motivates excluded groups to rebel.