Modern-day terrorism in the name of Islam is based entirely on the misinterpretation of Islamic texts. An example of this misinterpretation derives from this Quranic verse, “All power belongs to God alone.” (12:40) Here, hukm is used in the sense of the supernatural power of God. However, Muslim extremist thinkers have misinterpreted it to mean political power. Furthermore, it is said that Muslims, as representatives of God, should establish God’s rule on earth. This assumption is wrong because it is based on a Quranic verse that has been taken out of context. Another verse in the Quran says ʿIdilu. It means, ‘Follow the principle of justice [in your life].’ (5:8) But a misinterpretation of this verse has taken it in the transitive sense instead of the original intransitive sense in which it was used in the Quran. The verse means that justice should be imposed on people by force. As a result of this misinterpretation, the concept of justice has been politicized. This political interpretation of Islam has no basis in Islam. The terrorist phenomenon is, therefore, based on the misinterpretation of the scriptures. It can be countered only by presenting the correct interpretation of the exact text used to radicalize people. It will act as a counter ideology. It will make people understand that the present militancy, based on the political interpretation of Islam, has no sanction in Islam. Then, we must present the Islamic position of the same scriptures. And then it must be universally publicized worldwide. Realising that their actions are un-Islamic, people with an extremist bent of mind will give up violent activism on their own and turn to peaceful activism. To counter the political interpretation of Islam, we shall have to re-engineer the minds of extremists along peaceful lines.