The Salvador Option is an approach to counter-insurgency warfare that was utilised by the United States Department of Defense during the Salvadoran Civil War. The term was later used in the context of counter insurgency operations coordinated by Colonel James Steele, a retired special forces veteran who was nominated by Donald Rumsfeld to help organise Shi'ite paramilitaries in an attempt to quell a Sunni insurgency during the Iraq War.  From 1984 to 1986 Steele operated as a counterinsurgency specialist and was head of the United States Military Group of US special forces advisers to frontline battalions of the Salvadorean military (which developed a reputation for its death squad activities). 
The use of such methods in Iraq was controversial and attracted debate in the Pentagon and among members of the Iraqi government. It raised the question of possible U.S. military involvement in the use of quasi-official death squads, a tactic that was allegedly instrumental in bringing a decade-long war against the Salvadorian Farabundo Martí National Liberation Front (FMLN) to a close.
An article published by Newsweek in January 2005 that explored the notion of the "Salvador Option" quoted anonymous military insiders but did not specify the precise origin of the phrase or explicitly say that those words were actually used by Pentagon sources.
According to Newsweek:
- "...one Pentagon proposal would send Special Forces teams to advise, support and possibly train Iraqi squads, most likely hand-picked Kurdish Peshmerga fighters and Shiite militiamen, to target Sunni insurgents and their sympathizers, even across the border into Syria, according to military insiders familiar with the discussions. It remains unclear, however, whether this would be a policy of assassination or so-called "snatch" operations, in which the targets are sent to secret facilities for interrogation. The current thinking is that while U.S. Special Forces would lead operations in, say, Syria, activities inside Iraq itself would be carried out by Iraqi paramilitaries."
Former defense secretary Donald Rumsfeld has publicly denounced the Newsweek article as "nonsense", when directly asked if such a policy was under consideration, he answered "Why would I even talk about something like that?"[not in citation given] Observers of the Iraqi conflict have taken these and other cues to argue that the "Salvador Option" was put into operation. They point in particular to the existence of a Shi'ite led unit affiliated with the Iraqi ministry known as the Wolf Brigade.
- Wolf Brigade, Shi'ite counter-insurgency unit operating since October 2004.
- James Steele (US Colonel)
- Special Police Commandos, a Sunni unit operating since September, 2004.
- Phoenix Program
- Chinese Solution
- Gibb, Tom (27 January 2005). "'Salvador Option' mooted for Iraq". BBC. Retrieved 2013-03-07.
- Hirsh, Michael; Barry, John (January 9, 2005). "The Salvador Option". MSNBC. Archived from the original on January 10, 2005.
- Mahmood, Mona (6 March 2013). "Revealed: Pentagon's link to Iraqi torture centres". London: guardian.co.uk. Retrieved 2013-03-07.
- Mahmood, Mona (6 March 2013). "From El Salvador to Iraq: Washington's man behind brutal police squads". London: guardian.co.uk. Retrieved 2013-03-07.
- "Iraq 'death squad caught in act'". BBC News. February 16, 2006. Retrieved May 23, 2010.
- http://ipsnews.net/news.asp?idnews=35159 - Iraq: Gov't Death Squads Ravishing Baghdad
- http://www.washingtonpost.com/wp-dyn/content/article/2005/12/03/AR2005120300881.html - Iraq's Death Squads