This article is about the Cold War policy. For the Star Trek episode, see "Balance of Terror".

The phrase "balance of terror" is usually used in reference to the nuclear arms race between the United States and the Soviet Union during Cold War. It describes the tenuous peace that existed between the two countries as a result of both governments being terrified at the prospect of a world-destroying nuclear war.

Some political scientists use this phrase as a means of differentiating the world situation that followed World War II from that which preceded it. Previously, the empires had prevented war between each other by maintaining a relative balance of their ability (economic, military, and political) to wage war against each other--the phrase "balance of power" was often used to describe this kind of tentative peace. The atomic bomb created a new political reality, in which two superpower nations had the ability to annihilate all life on earth. The obstacle to war between the communists and capitalists was no longer the fear that the other side was more powerful, but rather the realization that nuclear arsenals were now large enough and deadly enough that winning would still likely result in the destruction of one's country (and the rest of the world as well). In this counterintuitive way, the existence of the most powerful weapons ever created actually supported a kind of peace: while many wars were fought around the world during the Cold War, the superpowers never fought each other directly, nor were atomic bombs ever dropped in combat after Nagasaki.

See also mutual assured destruction.