<p>While a vast body of academic work exists on the effects of war, remarkably few studies have attempted to clarify how armed conflicts affect specific elements of state capacity—notably institutional capabilities and administrative effectiveness. Using a panel of 92 developing countries from 1990 to 2020, we employ advanced econometric techniques, including system GMM and Lewbel’s (2012) heteroskedasticity-based estimators, to examine the effects of armed conflicts on state capacity. The findings reveal that armed conflicts strongly and negatively affect several dimensions of state capacity: fiscal, legal, and educational capacity. Given that developing countries’ governments already operate with diminished capacity, our results indicate that the persistence of armed conflicts further exacerbates this fragility. These results remain robust when we include additional control variables, account for regional specificities, consider levels of dependence on natural resources, use alternative measures of armed conflicts, employ other indicators of state capacity, and apply different estimation techniques. The negative effects of armed conflicts on state capacity are more pronounced in resource-rich countries than in resource-poor ones, suggesting that the struggle to secure natural resource revenues further accentuates the damage war inflicts on the institutions of developing countries. Conversely, military spending rises in conflict years, suggesting a deliberate reallocation of state resources from development functions to security purposes. Based on these findings, we argue that peace and strong institutions are essential to successful long-term state capacity building, with far-reaching consequences in the areas of fiscal governance, rule of law, and educational capacity. The policy implications of our findings emphasize the importance of continued conflict prevention and post-conflict institution building that specifically targets the aspects of state capacity affected by conflict.</p>