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A key finding in the terrorism literature is that dictatorships experience less terrorism than democracies. However, we have few explanations for why some dictatorships experience substantial threats from terrorism while others do not. A growing body of work on authoritarian politics focuses on political institutions in these regimes to explain a broad range of political outcomes. Building on this literature, we argue that opposition political party activity increases the collective action capacity of regime opponents and that elected legislatures can channel this mobilized capacity into support for the government. However, when active opposition parties operate in the absence of legislatures, political opponents increasingly turn to terrorism. We find evidence that terrorist groups are most likely to emerge in dictatorships with opposition political parties but no elected legislature. These regimes also experience the highest volume of subsequent attacks. [ABSTRACT FROM PUBLISHER]