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Is naming a rebel group as a terrorist group effective in tackling rebel groups? Since the 9/11, designating a rebel group as a terrorist has been a common strategy used by governments involved in civil conflicts to delegitimize a group. However, there is little evidence and argument on how delegitimizing a group affects the peace process in civil conflicts. We argue that contrary to the intuition that a government does not negotiate with a designated group, designation increases the likelihood that both a government and rebel group have negotiation. “No negotiation with terrorists” principle tends to be considered as rejecting the room for peace negotiation with a rebel group, but a designation can be used as a leverage of a bargaining by a government. Employing a newly compiled dataset on terrorist designation and Peace Negotiation in Civil Conflicts (PNCC) dataset, we provide statistical evidence to our argument. The findings of this paper will contribute to a growing body of research on counterinsurgency and offer important policy implications for governments engaging in civil conflicts.