Rationalist developmental theories, whether statist, liberal or Marxist, expect the scale of governance to grow steadily. Yet, after increasing well into the 19th century, territorial state sizes started declining toward the end of that century and have continued to do so until today. What explains this puzzle? We argue that ethnic nationalism is a main driver of this development. To substantiate this point, we rely on various spatial data resources on state borders and ethnic maps that trace the two past centuries of European history, and global history since 1886. Our analysis is conducted at the systemic and state levels, and exploits information at the interstate dyadic level to reconstruct trends in average state size for ethnic and non-ethnic border change. We find that while nationalism exerts both integrating and disintegrating effects on states’ territories, it is the latter impact that has dominated.