Previous research on terrorism has tended to focus on its country-level determinants. Although a closed polity approach can be helpful to understand the domestic causes of terrorism, existing research has generally had little to say about contagion as an additional determinant of terrorism or the conditions under which terrorism spreads from one country to others. This study identifies theoretically spatial mechanisms of contagion of ethnonationalist and ethno-religious terrorism. It develops a series of hypotheses on contagion as a consequence of increased interaction opportunities and information flow between geographically proximate ethnic groups and contagion as a consequence of emulation between ethnic groups that are structurally similar (e.g. politically discriminated) and are connected by some existing networks (e.g. same ethnic kin/diaspora groups, or religious ties). The hypotheses are tested on a new dataset of ethnonationalist and ethno-religious terrorist organizations from 1970 to 2011 using Bayesian spatial econometric models. The results provide strong support for the hypothesized mechanisms leading to the diffusion of terrorist tactics between groups.