The authors conducted a large-scale study of terrorism in Israel via telephone surveys in September 2003 with 905 adult Jewish and Palestinian citizens of Israel (PCIs). Structural equation path modeling indicated that exposure to terrorism was significantly related to greater loss and gain of psychosocial resources and to greater posttraumatic stress disorder (PTSD) and depressive symptoms. Psychosocial resource loss and gain associated with terrorism were, in turn, significantly related to both greater PTSD and depressive symptoms. PCIs had significantly higher levels of PTSD and depressive symptoms than Jews. Further, PTSD symptoms in particular were related to greater authoritarian beliefs and ethnocentrism, suggesting how PTSD may lead to a self-protective style of defensive coping. Copyright 2006 APA Publication Types: Research Support, Non-U.S. Gov't