This author examines terrorism as a dysfunctional response of individuals from a communal and fundamentalist religious cultural background to the developmental crisis of the self in the context of the globalizing influences of an individualistic and highly secular Western culture. It offers a developmental framework for addressing these global tensions. The chapter suggests the need for a systemic approach to the cultivation of critical moral consciousness and the overcoming of ideologization, through opening a dialogue and collaboration among a wide range of cultural and religious groups in relieving the anxieties of the global transition, and articulating a coherent vision of social health, which integrates meaningfully collectivist values into democratic societies.