Drugs, governance and civil conflict are intrinsically interrelated in a complex web of mutual causality. Governance and civil conflict are linked with regard to state capacity (Fearon & Laitin, 2002). Weak states are much more likely to experience civil war than stronger states. The capacity of a state is also related to the ability to control the production of illegal narcotics. Moreover, drugs serve to undermine the legitimacy of the state through the spread of corruption associated with drug trafficking. The production of illegal narcotics is also associated with the incidence of civil wars (e.g. Colombia, Afghanistan, Myanmar/Burma). While warfare `may under certain conditions minimize the costs while raising the benefits of illicit drug production; conflict can act as a catalyst which converts traditional, small-scale drug production into a large-scale, income-generating enterprise' (World Drug Report 2000; 156). We propose a model that accounts for these endogenous relationships. The paper uses empirical data from 1988 to 1999 to test hypotheses derived from our theoretical model. Statistical data on nation-level drug seizures and production from the United Nations' International Narcotics Control Board Report are used along with Uppsala conflict data (Gleditsch, et al, 2002) and World Bank data on the control of corruption. In preliminary statistical analyses, drug production was found to be significantly and positively associated with both corruption and civil conflict.