This article examines the question whether nationalism is state-building or state-destorying. To correct a common over-generalization, the article identifies three kinds of states: ideal nation-states, multinational states, and state-nations. The relation between nationalism, defined as loyalty to the nation, and strength of state is then discussed under each of the three contexts. In ideal nation-state, nationalism is unambiguously state-building. In multinational states, whether nationalism is state-building or state-destroying depends on the degree of integration of the nations with the state, which is in turn governed by a set of integrative factors. Finally, in state-nations there is no nation, and thus no nationalism, at the time of state-formation. The heterogenous nature of state-nations often tempts leaders of these states to promote nationalism from above. However, these efforts tend to be state-destroying as they increase the tension between the state and the tribes and or ethnic groups.