In this paper, differentiated integration theory will be used as a theoretical framework for interpreting the haphazard evolution of the EU counterterrorism policy in the aftermath of the 9/11 terrorist attacks. Although many EU Member States (MSs) experienced large scale terrorist attacks and both national and EU policy-makers have repeatedly acknowledged the need to tackle the apparent contradiction between borderless terrorism and national counterterrorism measures, a genuine supranational EU counterterrorism response has not emerged thus far. Albeit the EU has attempted to bolster its nascent EU’s counterterrorism capabilities spanning across all pre-Lisbon pillars via a set of policy programmes and strategy documents; adoption of new legal instruments and harmonization/updating of existing national legislation; convening of expert groups to share best practices; improving of information exchange among national security agencies, boosting of the capacities of its own agencies (in particular Europol and Eurojust), and by coordinating Member States’ activities regarding prevention of radicalization and cooperation with third countries, the overall EU’s influence on the way counterterrorism action is conducted on the ground by MSs states remains rather limited due to the lack of relevant competences and tools. Moreover, in several crucial areas of counterterrorism, including data exchange and judicial and police cooperation, the subsidiarity principle applies and three Member States (UK, Ireland and Denmark) have opt-in/outs from the entire Justice and Home Affairs agenda. More generally speaking, the exception clause related to issues concerning the ambiguous area of EU’s “internal security” allows MSs to call upon their national sovereignty and deviate from the EU counterterrorism policy to the extent that they can prove that law and order are affected by EU measures. In addition, art. 4(2) of the Treaty on European Union (TEU) stipulates that “national security remains the sole responsibility of each Member State.” From an EU integration perspective, the hitherto evolution of EU counterterrorism policy can therefore be interpreted as an example of vertical and horizontal differentiation, i.e. a low degree of delegation to the EU level and a high degree of variable membership. In the proposed paper, we will therefore answer the following research question: What are the key explanations for the lack of horizontal and vertical integration in the EU’s counterterrorism policy?