This research work studies “The US and the Emergence of Islamic State (IS): The Paradox of America’s War on Terror”. One cannot study the history of the contemporary Islamic terrorism without the involvement of the US. This is because the US has always been at the front burner of the war for and against terror, depending on the situation at a particular point in time. The emergence of Islamic State (IS) has given more impetus to international terrorism, chaos is spreading from the Middle East to other parts of the world as hundreds of thousands of Syrian and Iraqi refugees pour into other regions of the world especially Europe for refuge. Over the last decade, millions of Iraqis and Syrians have fled their homes. Many also have been killed in this campaign of Islamic terror. This work moves from cataloguing the activities of the IS to a historical analysis of how the US invasion of Iraq led to the monster we today call IS. This work is guided by the psycho-cultural theory of conflicts, this theory is adopted as result of the fact that it is a psychoanalytical tool that addresses violence at a personal, cultural and psychological level. The psycho-cultural theory of conflicts contends that psychological, religious and other cultural and identity based contradictions are the basis of conflict in the society. This work hence discovers that the US invasion of Iraq is the chief cause of the IS led violent conflict going on in the Middle East presently. The reason for the invasion and the sectarian favouritism the US extended to the Shia population spurred the Sunni who felt short-changed into what we now call IS terror campaign. Secondly, the Abu Ghraib prison torture scandal, which involved the US armed forces had a radicalising effect on the Iraqi Sunni population and members of the deposed Hussein’s secular Baath Party. Finally, a sizeable number of the prisoners in the US detentionfacilities in Iraq during the occupation were Islamic extremists and former members of the deposed Saddam Hussein’s secular Baath Party who converted to radical Islam in American prisons. Thus when the occupation ended, these men had every reason to pick up arms to create an Islamic State where they will feel safer. This work, based on the findings, concludes by proposing recommendations on how the threat posed by IS could be ameliorated, and also how to prevent the emergence of such a large scale terror campaign in the future.