With a global security infrastructure that deters interstate wars, states establish a reputation of resolve by supporting rebellions abroad. Co-ethnicity, in particular, is used as a narrative by potential sponsor states who want to build their reputation. Our theory predicts that: i) a state with more co-ethnic groups in its neighborhood is more likely to support a foreign co-ethnic rebellion, and ii) ethnic groups whose potential sponsors count more co-ethnic groups in their neighborhood benefit from higher political inclusion. The first result shows that states invest in their reputation, and the second one that such a strategy is effective. We test the empirical plausibility of the two predictions with a data set of more than 280,000 ethnic group × sponsor state × target state × year observations. Our findings lend credence to reputation building as a determinant of a sponsor state’s activism in a target country, even when we focus on the most reasonably exogenous source of identification—namely, changes in the ethnic structures of countries outside the considered country pair. We also show that the reputation-building mechanism translates into political concessions in the target states that are beneficial to groups related to reputed dangerous potential sponsors.