Scholars have long accepted the contention that competition among terrorist organizations raises the level of violence used by the competitors. This article discusses this claim and advances another—that competition among terrorist organizations creates incentives to use less violence. Using insights from the organizational ecology literature—namely that competition occurs within "species"—I create a variable that assesses intraspecies competition. I test both claims using a data set of domestic terrorism created from the Global Terrorism Database (GTD) for the years 1970 to 1997. I find support for the hypothesis that competition leads to more terrorism, validating the claims of outbidding theorists. Furthermore, ideologies have differential effects on whether outbidding occurs, with nationalist and religious terrorist groups responding to competition with more terrorism and left-wing organizations responding with less.