Transnational terrorism with special reference to the September 11 attacks in 2001 on the territory of the United States has significant impacts on NATO’s approach to terrorism at rhetorical, practical and institutional levels. This thesis describes and explains the role of transnational terrorism on NATO’s transformation process, which intensified with the end of Cold War era. The Alliance’s 1991 and 1999 Strategic Concepts already defined terrorism as one of the risks to the Allies’ security. However, NATO began to actively engage in fighting against terrorism after the September 11 attacks. Just after 9/11, NATO for the first time in its history invoked Article 5, which is the collective defense clause of the Washington Treaty. Particularly, the Prague Summit held in 2002 has been catalyst for the transformation of Alliance into an organization that is more adaptive to the new security environment where the threats are less likely to be state-centric. In the assessment, until September 11, 2001, terrorism did not have a priority on the NATO’s agenda. Then, after the dramatic assaults, almost every step in the Alliance has been taken in the name of fighting against terrorism. The creation of the NATO Response Force, Terrorist Threat Intelligence Unit and further a new “Allied Command Transformation” are several examples in this regard. Basically, 9/11 demonstrated that transnational terrorism constitutes a very serious threat even for a super power, nobody is immune from terrorism and the approach to terrorism as a domestic threat is no longer applicable.