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Sectarian militants have for years launched attacks from Pakistan across the border to Iran. Finding sanctuary in a neighbouring country can make the difference between success and failure for militants. Conventional wisdom holds that a lasting transnational militancy challenge would typically create serious interstate conflict. Militancy has triggered armed encounters between Iran and Pakistan. This article argues that despite some tension militancy has resulted in deeper cooperation in the ambivalent dyad. Both states’ overarching security concerns, having exhausted other options, the believed involvement of third-party states, and economic potential, have moderately alleviated negative pressure caused by militancy.