It has been one of the most debated puzzles in the study of political economy of terrorism whether economic development can curb terrorism. In Xinjiang, a multi-ethnic region in West China, it is widely believed that higher income levels can decrease the likelihood of terrorism conducted by Uyghur separatists or Islamic extremists. However, the county-level data for the year of 2013 show that better economic performance may not work as is expected. Instead, empirical evidence indicates that income is positively associated with the probability of terrorist attacks, and the effect is statistically significant. Projects that are aimed at boosting local economic growth result in a flood of migrants, and the local Uyghurs are disadvantaged in the employment market. Consequently, economic grievances will be generated. Some, but not all, Uyghurs have a shared motivation to resist, but tight social control in the region constrains the form of resistance, in the sense that neither mass protests nor armed rebellion are feasible. Terrorist attacks that come at a lower cost become a preferable choice. In addition to economic grievances and tight control, external factors also help to boost terrorist activities in Xinjiang, but more empirical and field research is needed before we could clarify how external factors, such as the international jihadist movement, interact with local conditions and result in terrorism in the region. Copyright © 2017 Cambridge University Press.