Djibouti occupies a geo-strategic position in Eastern Africa with borders to the Suez Canal in Egypt and lies between two highly conflicted regions, notably the Horn of Africa and Gulf region. Since the 9/11 attack in New York, the importance of Djibouti has increased because of its strategic location as a regional hub and a point of transit for the terrorist groups. This chapter discusses Djibouti’s geo-strategic significance to terrorism and counterterrorism strategies. It also analyzes the different regional dynamics and groups that pose threats in Djibouti and the country’s responses to such terrorism threats. The chapter relies majorly on secondary sources and subject matter experts as well as state security officers’ interviews. The chapter finds that, terrorism threat in Djibouti does not originate from within its borders but from the regional dynamics and its neighboring states with presence of terrorist organizations like the Gulf and other Horn of Africa countries like Somalia. The presence of cross-border homogenous communities with ethnic kin connection that allows free cross-border movement contributes to its vulnerability and infiltration of terrorist and extremist elements into Djibouti. The chapter recommends several interventions to keep terrorists and extremists at bay from Djibouti. These include countering violent extremism, enhancing transparency and accountability on the government authority side, creating synergies within state institutions and other counterterrorism actors, inclusive community engagement, and public-private sector participation. The chapter concludes that due to its geo-strategic location, the neighboring terrorist-affected countries, and the presence of foreign troops, Djibouti stands as a high-value target for terrorism threats.