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This paper shows that contemporary political reasoning and action in the context of modern terrorism derives from moral arguments that are seriously flawed. Those arguments are built on a simplistic understanding of terrorism and exclusively adhere to ‘conventional’ act-based ethical, for example, deontological or utilitarian, frameworks for morally assessing the political reality of terrorism and counter-terrorism. As a result, political reasoning and counter-terrorism action fail to take into account certain indispensable morally relevant features of terrorism. It will be argued in this paper that contemporary approaches are therefore unable to grasp the (moral) complexity of the terrorist phenomenon what ultimately leads to political paralysis in the domain of counter-terrorism action. In order to be able to include a more extended notion of morally relevant features of terrorism in an understanding of terrorism and consequently in its moral assessment, this paper develops an alternative ethical framework based on virtue ethics and on a eudemonistic concept of the good life. In a last step, this paper shows how such a comprehensive and integrative, virtue-ethical, framework overcomes the limitations of current dominant approaches and so contributes to promoting morally legitimate, sustainable and effective counter-terrorism action