This article examines state capacity and counter- terrorism challenges in Kenya, with a particular focus on Garissa County, a region especially susceptible to cross- border terrorism due to its proximity to Somalia. Utilizing the Strategic Theory of Terrorism, the study conceptualizes terrorism as a rational and adaptable form of violence that exploits systemic vulnerabilities within state structures. The research employs a descriptive design, targeting 163,914 residents and selecting a sample of 399 respondents based on the Krejcie and Morgan formula. Data collection methods include questionnaires, interviews, and focus group discussions, with analysis conducted through both descriptive and inferential statistics, as well as thematic qualitative analysis. The findings demonstrate that terrorist activities have a substantial negative impact on livelihoods, security, and socio- economic development in Garissa County. Key counter- terrorism challenges identified encompass porous borders facilitating militant movement and weapons trafficking, technological gaps constraining surveillance and intelligence capabilities, and inadequate law enforcement resources. Furthermore, the study indicates that media coverage may unintentionally advance terrorist objectives, while weak community cooperation and mistrust hinder effective intelligence sharing. Socio- economic factors, notably youth unemployment, significantly heighten vulnerability to radicalization and recruitment by groups such as Al- Shabaab. The study concludes that structural, operational, and socio- economic constraints reveal critical deficiencies in Kenya' s capacity to effectively combat terrorism. It recommends a multidimensional approach, including investment in intelligence- led policing, reinforcement of border security, enhanced community engagement, and targeted youth empowerment, as essential measures to strengthen counter- terrorism strategies and resilience in the affected regions.