Defense Institution Building (DIB) plays a crucial role in NATO’s “Projecting Stability” agenda by assisting Partners in developing their defense and security sectors, thereby increasing not only their security, but also that of the Euro-Atlantic region. At the same time, the current security environment is defined by complex and diffuse threats coming from both state and non-state actors, where the adversary aims at incapacitating the state. For this reason, increasing the resilience of the defense and security institutions against the hybrid threats in particular is key – a reality which should inform adaptation of the NATO’s DIB instruments. This article discusses a number of key implications of the hybrid warfare for NATO’s DIB policies and processes, emphasizing that capacity building should aim to help the state institutions increase their ability to recognize and respond to hybrid warfare and, if necessary, to sustain the functioning of the state and its institutions under hybrid warfare conditions.