Previous research has shown that ethnic exclusion and restricted political access can motivate ethnic groups to resort to violence. Although these links are better established for civil wars or conventional conflict, we believe that the same logic should be applicable to ethnic terrorism as well. If so, can reforms towards greater ethnic inclusion also reduce terrorist risks? We argue that reform and changes towards greater ethnic inclusion and democratization should induce substitution and reduce the volume of terrorist violence, even if attacks by splinter groups may persist. We develop propositions on terrorist attack frequency, given group characteristics and accommodation. We take advantage of the large changes towards democratization, decreased discrimination, and increased ethnic accommodation since the third wave of democratization and the end of the Cold War, as well as new data linking domestic terrorist organization in the Global Terrorism Data to specific ethnic groups in the Ethnic Power Relations data. Our group-level analyses suggest considerable support for a decline in terrorism following accommodation.