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This article explores psychological factors involved in terrorism and counterterrorism on individual, group, and organizational levels of analysis. On the individual level, we describe attempts to understand terrorist behavior as a form of psychopathology and/or as reflecting a unique constellation of personality traits. We also consider whether there exists a general motivational basis for participating in terrorism. On the group level of analysis, we address the process of shared reality construction, social influence involved in recruitment of new members to terrorist organization, their indoctrination into terrorist ideology, and the use of language in creating terrorism warranting norms. On the organizational level, we consider issues of training, logistics, and cost effectiveness as they apply to the decisions to launch or abstain from terrorist activities. We conclude by considering the implications of our analysis for possible ways and means for countering terrorism.