The Collaborative International Dictionary of English v.0.48:

Territorialize \Ter`ri*to"ri*al*ize\, v. t. [imp. & p. p.
   Territorialized; p. pr. & vb. n. Territorializing.]
   1. To enlarge by extension of territory.
      [1913 Webster]

   2. To reduce to the condition of a territory.
      [1913 Webster]