States frequently use leadership decapitation in their domestic and cross-border counter-insurgency/terrorism operations, yet the literature is far from having a consensus regarding its effects. I argue that literature focuses on the military implications of decapitation (its implications for the organisation’s operational capabilities/ability to generate violence) at the expense of its implications for negotiations between insurgents and the state. Second, I argue that leadership arrest and killing are analytically distinct categories of leadership decapitation that can trigger different processes and outcomes and that an arrested leader’s possible role from the prison should be considered in the analysis since leadership arrest alters the leader’s incentives, resulting in a new bargaining game between the leader, the state, and the organisation. I empirically illustrate these arguments using the arrest of the leader of the Kurdistan Workers’ Party (PKK) Abdullah Öcalan as a theory-building case study. In the case study, I show that Abdullah Öcalan’s arrest was productive for terminating the conflict in the short run, whereas it was counter-productive in the medium and long run. These findings suggest that the literature may benefit from tracing the process closely, considering the dynamic nature of conflicts and the impact of decapitation on bargaining processes, without limiting the temporal scope of inquiry.