The Yemeni state has all but collapsed as the political transition that followed the popular protests in 2011 has been derailed. This has left Yemen without a functioning central government and thus provided a ripe context for the expansion of both al-Qaeda in the Arabian Peninsula (AQAP) and Islamic State in Yemen. This article focuses on the balance of power between AQAP and Islamic State in Yemen. Yemen is an interesting case of the international competition between al-Qaeda and Islamic State as the branch of al-Qaeda in Yemen, AQAP, is one of the strongest. The article argues that AQAP has sought to establish stronger local ties by enmeshing itself with the still strong tribal structures in Yemen whereas IS has sought to carve out a place for itself in Yemen by challenging AQAP on its religious zealousness, particularly by deepening sectarian divisions in Yemen.