Do military alliances lead to peace or to war? Research has suggested that defensive alliances to potential targets deter dispute initiation (Leeds 2003b:427). This would seem to suggest that forming defensive alliances is a good policy prescription for those seeking to encourage peace. Yet, some argue that even if defense pacts have a deterrence effect, defense pacts may also have other effects that increase militarized conflict in the international system. Specifically, defense pacts may encourage member states to initiate and/or escalate disputes. In an analysis covering the period from 1816 to 2000, we evaluate these three potential effects of defense pacts—deterrence, initiation, and escalation. We find support for the hypothesis that defensive alliances deter the initiation of disputes but no evidence in support of the claims that states with defensive allies are more likely to initiate disputes in the international system or that targets with allies are more likely to respond to dispute initiation with further militarization. We conclude that defensive alliances lower the probability of international conflict and are thus a good policy option for states seeking to maintain peace in the world.