We examine the strategic rationale for terrorist tactics in civil war. We identify conditions that favor terrorism as a tactic in armed civil conflicts as well as the specific targets as a function of rebel characteristics, goals, and government responses to political demands. Terrorist tactics can be helpful as an instrument to coerce the government in asymmetric conflicts, as rebels are typically weak relative to the government. But terrorism can also help communicate the goals and resolve of a group when there is widespread uncertainty. We consider the strategic importance and rationale for terrorism in terms of the frequency of attacks and specific targets, and analyze our propositions using new data linking actors from the Uppsala/PRIO Armed Conflict Data and the Global Terrorism Database. Consistent with our expectations, we find that terrorism is used more extensively in civil conflicts by weaker groups and when attacks can help the group convey its goals without undermining popular support. Groups with more inclusive audiences are more likely to focus on ‘hard’ or official targets, while groups with more sectarian audiences are more likely to attack ‘soft’ targets and civilians.