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Terrorism emerged as serious security problem in<br />Indonesia since a network of terrorist group rocked<br />this country, started from the Bali bombing (2002)<br />followed by other consecutive bombings, such as, J.<br />W. Marriott Hotel bombing (2003), the Australian<br />Embassy bombing (2004), and the Ritz Carlton Hotel<br />bombing (2009). This article attempts to examine<br />the ways in which the government responded towards<br />the problem. What sort of policies did the<br />Indonesian government take to respond to terrorism<br />during the 2002—2009 period? This study uses a<br />qualitative research method. The data used in this<br />research are derived from official documents, direct<br />interviews with government officials and the secondary<br />sources (books and journals) on terrorism and<br />counterterrorism. This article shows that the government<br />adopted the legal approach or law-enforcement<br />(“hard approach”) by issuing the anti-terrorism<br />law as a legal framework and by reorganizing<br />the police force to strengthen its counter-terrorist<br />capability. It also adopted an “ideological” approach<br />(soft approach) to battle religious extremism. This<br />sort of approach is mainly aimed at defusing and<br />neutralizing the religious extremism of terrorist groups<br />and preventing it from spreading into the wider community.<br />This article shows that the government has<br />used effectively both approaches in destroying problem<br />of terrorism in Indonesia.<br />Key Words: Indonesia, policy, terrorism,<br />counterterrorism, legal approach, “ideological”<br />approach.