We study the nexus between US economic and military aid, human rights conditions, and the emergence of anti-American transnational terrorism in aid-receiving countries. Using data from 126 countries for the period 1984–2008, we show that a combination of local repression and military or economic dependence on the USA results in more anti-American terrorism. This relationship only breaks down at high levels of dependence. There is no evidence that the USA is made any safer by providing foreign assistance, even if this assistance is substantial or is channeled to highly oppressive regimes which might be less restricted in terms of their instruments of fighting terrorism. Our findings also hold true when we account for the potential endogeneity of US aid and human rights conditions to anti-American terrorism.