Ethnic conflicts continue to be the most common form of intrastate conflict. The international community makes efforts to transform war-torn societies into peaceful democracies, often overlooking that building peace can conflict with building democracy, and vice versa. Using findings of the rich literature of Institutional Engineering, this article aims to identify the institutions which have led to successful war-to-democracy processes after ethnic conflict. It is argued that institutions are most suitable if they provide for self-determination rights, cooperation and the diffusion of power. War-to-democracy processes are analyzed in 13 conflict cases worldwide between 1994 and 2016 with the help of Qualitative Comparative Analysis (QCA). Results show that the inclusion of groups is the decisive key. The article contributes to ongoing discussions about which type of institutional design is best suited to achieve the twin goals of sustainable peace and durable democracy after ethnic conflict.