The fall of the Ba’th regime as a result of external intervention created a fissure in the domestic machination of the Iraqi state. The expedient and incongruent statebuilding that ensued following state collapse created, among other things, a security vacuum that markedly altered the trajectory of the country’s democratic transition and consolidation. An emblematic outcome of these failed transition policies was a displacement crisis that resulted in the forced resettlement of Iraqis both as internally displaced persons (IDPs) and refugees in neighboring states. While the American-led intervention that toppled the authoritarian equilibrium contributed significantly to forced displacement, the reliance on ethnic solidarity by successive ruling elites in an increasingly divided political arena hindered the implementation of post-conflict state and peacebuilding measures that would have mitigated the institutional and political drivers of displacement. This paper surveys the processes and conditions that affect the galvanization of ethno-religious discord as a driver of displacement in weak, multiethnic states like Iraq. It argues that, in the present case, displacement is a multilayered process linked to institutional and political conditions that fuel group grievances and ethnic mobilization. Explaining displacement as an outcome of stalled statebuilding and the absence of peacebuilding following democratization requires the dual task of identifying and linking institutional and structural failures to communal discord. To do so, we examine the effects of four interlinked variables that have both affected displacement and hindered voluntary repatriation following authoritarian breakdown: institutional deficiencies, re-emergent authoritarianism, the inability or unwillingness of the state to underwrite human security and the rule of law, and the increasing role of ethnic and sectarian militias in the absence of a unified security sector. These factors, we argue, incentivize and reframe group grievances producing an ethnic security dilemma that drives displacement and forced migration. Methodologically, we rely on data gathered from the United Nations Mission for Iraq (UNAMI), the U.N. Refugee Agency, the Fragile State Index, and the World Bank’s Development Indictors, all of which aggregate and measure the scale of displacement, state fragility, and institutional and political developments in Iraq since 2003. Theoretically, by identifying the institutional and structural causal mechanisms that affect group grievances and forced displacement, this paper contributes to existing works on international intervention, democratization, security sector reform, post-conflict statebuilding, and civil conflict in multiethnic states.