The authors analyze the relationship between the type of political regime and the level of terrorist activity, with a particular emphasis on the so-called factional democracies. The key difference of factional democracies from other political regimes is the presence of polarization between opposing factions. It has been reported that political polarization transforms the conventional institutionalized political process into unconventional politics. The authors draw attention to the fact that in the existing scientific debate, there is no clear conclusion about the nature of the relationship between the type of political regime and the level of terrorist activity in the country. A literature review suggests that there is a curvilinear, U-shaped relationship between the level of terrorist activity and the type of political regime, which is consistent with the findings of previous works describing the relationship between socio-political destabilization and the type of political regime. Preliminary testing conducted by the authors indicates that factional democracies are subject to significantly more terrorist attacks than any other political regimes. While analyzing data on the level of terrorist activity, the authors address the need to split the sample into subsamples, due to the nonlinear nature of the relationship between the level of terrorist activity and GDP per capita, as well as the mean of years of schooling. The presence of a positive relationship between factional democracies and the level of terrorist activity is also verified by applying a negative binomial regression. The authors offer their own answer to the question of why so many previous studies have detected a positive correlation between democracy and terrorism. Attention is drawn to the fact that the positive relationship between democratic regime and the level of terrorist activity can be obtained due to the inclusion of factional democracies into the overall sample of democratic states. If factional democracies are excluded from the sample, the relationship between the level of terrorist activity and the democratic regime turns out to be clearly negative. The findings about the relationship between regime type and terrorist activity are replicated at the subsamples level. The general conclusion is that a factional democracy turns out to be a very strong positive predictor of high levels of terrorist activity, whereas a non-factional democracy turns out to be a statistically-significant predictor of the relatively lower levels of the intensity of terrorist attacks.