Since the Islamic revolution in 1979, Iran has been one of the world's most active sponsors of terrorism. Despite Iran’s support for terrorism for more than 25 years and its possession of chemical weapons for over 15 years, Tehran has not transferred any unconventional systems to terrorists. Iran is likely to continue this restraint and not transfer chemical, biological, or nuclear weapons for several reasons. First, providing terrorists with such unconventional weapons offers Iran few tactical advantages as these groups are able to operate effectively with existing methods and weapons. Second, Iran has become more cautious in its backing of terrorists. And third, it is highly aware that any major escalation in its support for terrorism would incur U.S. wrath and international condemnation. Iran’s use of terrorism has changed dramatically since the 1980s. Most importantly from a U.S. point of view, Iran appears not to target Americans directly, although it still retains the capability to do so. In Iraq, some groups with links to Iran have fought with coalition forces. Instead Iran uses terrorism as a form of deterrence, casing U.S. embassies and other facilities to give it a response should the United States step up pressure. Today, Iran uses terrorism and support for radicals in several distinct ways. Particularly important for the United States are Tehran's close relationship with the Lebanese Hezbollah; support for anti-Israel Palestinian groups; ties to various factions within Iraq; and loose contacts with al Qaeda. Policymakers should recognize that U.S. options with regard to Iranian support for terrorism are limited. The article concludes with recommendations for decreasing Iran’s use of terrorism in general, and the chances of it transferring chemical or other unconventional weapons to terrorists in particular. Appendix