Literature is the interpreter of life and society. It interprets facts and problems of life in an impressive and effective way. Terrorism, extremism, ignorance, dictatorship, sectarianism, atrocities, tyranny, so called scientific advancement, are few of the aspects of the modern life. We find that literature has reflected upon the incidents and events between 90s to date very meaningfully and made it a history. Especially, it enunciated fine examples and illustrations of effects and tragedies caused by terrorism and extremism during these decades. Terrorism affected all the genres of literature; Terrorism, extremism, ignorance, dictatorship, sectarianism, atrocities, tyranny, so called scientific advancement, too, accepted its influence. The way short story focused this issue of terrorism and its effects and the way it unveiled the facts related to it in detail, are not found in other genres of literature. This article discusses and explores the work and treatment of the urdu short stories regarding the phenomenon of terrorism and its effects on the society.