The general concept for nitroxide‐mediated radical terpolymerization is advanced. This concept is based on activation‐deactivation equilibria for terminal polymer‐nitroxide adducts. Depending on monomer activity and the stability of terminal nitroxide adducts, terpolymerization can be equilibrium living, quasi‐equilibrium (gradient) living, decaying living, decaying gradient, or non‐living. Expressions for the effective activation‐deactivation equilibrium constant, Kef, and the rate of terpolymerization are derived from theoretical speculations on equilibrium living and decaying living terpolymerization. For quasi‐equilibrium living terpolymerization, various types of gradient terpolymers are predicted. When activity of the active monomer M1 is, at least, one order of magnitude different from that of the two other monomers, the effective constant Kef is shown to approach K1 of the most active monomer. Experimental kinetic and equilibrium constants agree with the advanced concept for the equilibrium living terpolymerization of styrene with methyl methacrylate, and acrylonitrile in the presence of nitroxide SG1, as well as for decaying living terpolymerization in the same system in the presence of nitroxide TEMPO.