Introduction In the West, we hear a lot about terrorism in relation to Israel: Palestinian militants in Gaza using rockets to fire at Israeli towns over the ‘border’; and Palestinian suicide bombers strapping on explosives and detonating their payloads in Israeli cafes, bars, restaurants and buses. These attacks on civilian targets for the purpose of making a political statement are, indeed, examples of terrorism and Israeli civilians are right to demand that their government act decisively to prevent such acts. Yet Israel often responds to these terrorist tactics by adopting its own. When Israel sanctions and employs tactics which are designed to instil fear, humiliate, injure or otherwise cause harm to a civilian population for a political purpose, the state is guilty of state terrorism. Identifying those policies which constitute state terrorism requires an examination of both the intent and effect of actions (and inaction) by the state. The purpose of this chapter is to evaluate whether various Israeli policies and practices employed in Israel’s occupation of the Palestinian Territories constitute ‘state terrorism’. This policy analysis, while not exhaustive, is intended to present a broad cross-section of policies in recent and current context. Material has been sourced from reputable, human rights, non-government organizations (NGOs), United Nations (UN) bodies and published eyewitness accounts collated since the commencement of the second intifada. Where the effect of state (in)action is identified as instilling fear, humiliating or injuring a person and the broader community, then it may constitute state terror. To assess whether the (in)action qualifies as state terror rather than simply state repression, we must look at intent. Ruth Blakeley, in her volume State Terrorism and Neoliberalism: The North in the South (2009), identified a key ingredient, ‘instrumentality’, which set state terror apart. That is, the intended target of the violent act (or threat) is the wider audience, rather than only the immediate victim. As no state is likely to acknowledge that the intended purpose of its policies is to spread terror among a population in order to gain political control advantages, we must deduce intent from the context. For the purposes of establishing whether the action’s purpose is legitimate, the following questions must be asked: Is the action a proportional response?