This paper reveals the dichotomous impacts of short sellers on corporate litigation risk throughout the securities class action lifecycle. Before misconduct occurs, potential threats of short selling (ex ante) deter managerial wrongdoings, thereby reducing subsequent litigation risk; however, once misconduct is committed, higher ex post short interest ratio facilitates its discovery, thus increasing litigation risk. Short sellers’ role is more pronounced in firms with weaker governance and opaque information. High short interest around lawsuits predicts subsequent settlement and CEO firings, indicating short sellers’ insight into the severity of the misconduct. These findings elucidate short sellers’ multifaceted impacts on securities litigation.