This study relates economic development to one of the well-observed predictors of domestic terrorism—minority discrimination—and revisits the relationship between terrorism and economic development. We argue that terrorism may be a rational choice when minorities’ exclusion from political power and relative deprivation from public goods increases and the unsettling forces in the initial phases of economic development provide aggrieved people with opportunities for mobilization. We find that economic development has a curvilinear relationship with terrorism. Highly developed countries are less likely to experience domestic terrorism than less-developed ones and the least developed countries have few targets. However, both rich and middle-income countries are vulnerable to domestic terrorism in the presence of minority discrimination.