A prominent theory holds that groups may use terrorism in order to provoke governments into undertaking repression that alienates the population. However, virtually no studies have addressed the central puzzle of this provocation logic: why states would actually fall into this trap, if doing so can backfire. This study seeks to address this puzzle by suggesting conditions under which states would respond to terrorism with repression. I argue that states with limited bureaucratic capacity are more prone to using repression after terrorist incidents, as their ability to selectively crack down is inhibited by their more limited capability for controlling, monitoring, and collecting revenue from their populations and for collecting intelligence on suspected terrorists. Using a cross-national analysis with data from 1981 to 2011, I find it is low-capacity states which are most likely to respond to terrorism with repression, while constraints on executive authority have no clear effect.