In I am Malala, the author defines terrorism from the perspectives of both terrorist and victim. For the terrorist, terrorism is the use of fear to control others. Although Yousafzai does differentiate between terrorism and war, she does not make a distinction between what Noam Chomsky has called "wholesale" and "retail" terrorism; that is, between the actions of nation states and those of insurgent terrorist cells. Her description of terrorism is equally applicable to the propaganda and violence of a repressive state.

From the victim's perspective, the author describes terrorism as a sense of all-encompassing fear. This is discussed in some detail in chapter 10, which is titled "What Terrorism Feels Like." At this time, the author is finding it increasingly difficult and dangerous to attend school, since many schools are the target of Taliban bombing. Yousafzai says that terrorism takes away certainty and stability. It means that the victim wakes up each morning not knowing what the day will bring, with a reasonable expectation that it may bring death. This constant fear makes it very difficult to live a normal life or concentrate on education, or anything else which makes life worthwhile. Terrorism, therefore, uses violence and the threat of violence to destroy focus and peace of mind.