The January 1986 intraparty leadership struggles in the People’s Democratic Republic of Yemen (PDRY) are sometimes cited as the decisive turning point in USSR-Third World relations when Moscow and, foremost, General Secretary Gorbachev finally came to the conclusion that previous policies towards client regimes on the periphery had to be abandoned. The bloody events of January 1986, claiming over 10.000 lives amongst them a large part of the Politbureau of the ruling Yemeni Socialist Party, ended the ascendancy of President Ali Nasir Muhammad who was forced out of office after an attempt to assassinate most of his political opponents, thereby killing the majority of previous Southern Yemeni leadership. The exile of the former President in the Yemen Arab Republic subsequently contributed to the deterioration in relations between the two Yemens, culminating in border clashes in late 1987. For the Soviet patron state, these developments threatened its long-defended position in the Gulf of Aden and the Horn of Africa. Based on newly declassified sources from the Ronald Reagan Presidential Library and records of the former East German intelligence service and Communist party records, this paper will offer the first document-based analysis of this crucial event during the late Cold War. It will demonstrate the strategic surprise in both Moscow and Washington in the course of the ’13 January conspiracy’ and the various attempts by both superpowers to take control of the situation. It will also demonstrate the escalating effect of sub-regional differences between the two Yemens, Saudi Arabia, Oman and Ethiopia as both Moscow and Washington tried to assuage their regional clients and to prevent their military or covert attempts to intervene in Southern Yemeni affairs.