This chapter argues that, contrary to the rhetoric of the War on Terror, Indonesia’s counterterrorism policies are neither specific responses to transnational terror networks, nor are they simply a byproduct of the post-9/11 era. We argue, instead, that counterterrorism policies in Indonesia cannot be disentangled from historical state reactions to internal security challenges—ranging from social violence to terrorism and secessionism—since the country’s independence in 1945. While these different conflicts had diverse political, ideological, religious and territorial characteristics, they are united as disputes over the basic institutions and boundaries of the state. In light of this history, the Indonesian state’s response to contemporary political violence—such as the 2002 Bali bombings and the threat of transnational terrorism, allegedly centered on the Jemaah Islamiyah (JI) group—should be reexamined as part of these broader, historical trends in state responses to internal violence. We further argue that while the state, in seeking to maintain its territorial integrity and defend its institutions, has responded in a variety of ways to these conflicts, the particular domestic tools of coercion and repression used in President Suharto’s authoritarian New Order—from arbitrary imprisonment to forced disappearances and an all-out military campaign—have contributed to the rise of JI and its splinter groups and left a legacy of mixed responses to terror. Our examination of the evolution of internal political violence and state counterterrorism demonstrates that terrorism and counterterrorism in Indonesia are rooted within this context of the disputed postcolonial state. As such, state responses to terrorism and political violence in Indonesia have taken both a different form and function when compared to the reactions of the United States and United Kingdom. While the latter states committed their militaries abroad in an effort to exterminate foreign militants, our analysis demonstrates that the state has crafted responses to various sources of domestic violence—including different secessionist movements and JI—on an ad hoc basis and, in doing so, has utilized different security institutions, from the military to the police.