Perceived life threat is associated with post-traumatic stress disorder (PTSD). Still, it is not known whether perceived threat may be important for PTSD in people indirectly exposed to trauma. To examine the prevalence of perceived life threat and the association with PTSD in individuals directly or indirectly exposed to terror. Data are cross-sectional from a survey 10 months after the 2011 Oslo bombing. Perceived life threat was measured by the question: 'How great do you think the danger was that you would die?' scored on a five-point scale. PTSD was measured with the PTSD Checklist (PCL). The retrospective belief that one's life was in great or overwhelming danger was reported by 65% and 22% of employees who had been present or not present, respectively, at the site of the bomb explosion (n = 1923). A high perceived life threat was associated with PTSD among those present (odds ratio (OR) = 5.7, 95% CI 1.9-16.9) and not present (OR = 5.2. 95% CI 3.0-9.0), even after adjusting for objective exposure, demographics and neuroticism. Perceived life threat may play a central role in the development and maintenance of PTSD in people directly as well as indirectly exposed to terror. Moderating perceptions of having been in serious danger may be an appropriate approach to the prevention and treatment of PTSD. © The Royal College of Psychiatrists 2016.