Since the 1995-96 Taiwan Strait crisis, scholars and policymakers have become increasingly concerned about China's territorial ambitions. Yet China has also used peaceful means to manage conficts, settling seventeen of its twenty-three territorial disputes, often with substantial compromises. This article develops a counterintuitive argument about the effects of domestic confict on foreign policy to explain China's behavior. Contrary to the diversionary war hypothesis, this argument posits that state leaders are more likely to compromise in territorial disputes when confronting internal threats to regime security, including rebellions and legitimacy crises. Regime insecurity best explains China's pattern of compromise and delay in its territorial disputes. China's leaders have compromised when faced with internal threats to regime security, including the revolt in Tibet, the instability following the Great Leap Forward, the legitimacy crisis after the Tiananmen upheaval, and separatist violence in Xinjiang.