The increasing dependence on Information and Communication Technologies (ICTs) has unleashed a whole new genre of cyber terrorism. Cyber attacks on critical infrastructure, online hate propaganda and use of the internet for recruiting, planning and effecting terrorist attacks have become new frontiers of terrorism. The ubiquitous cyberspace has expanded terrorism structures and transformed their operations. Given their democratic traditions of privileging basic freedoms, such as individual privacy, and the unprecedented spread of the internet, India and the US face a formidable challenge in confronting cyber terrorism. While both countries share a strong political affinity to cooperate and have set up institutional mechanisms to secure cyberspace, divergences in their approaches and a lack of clarity and consensus on their immediate and long-term goals continue to be their fundamental limitations. In spite of their strong commitment to work together, their divergent approaches to internet governance and episodes like the WikiLeaks and Snowden affairs have only re-enforced their continuing trust deficit.