Peace education is considered a necessary element in establishing the social conditions required for promoting peace-making between rival parties. As such, it constitutes one of Israel's state education goals, and would therefore be expected to have a significant place in Israel's educational policy in general and in response to peace moves that have occurred during the Arab--Israeli conflict since the 1970s in particular. This article reviews the educational policy actually applied by Israel's state education over the years as reflected in formal educational programs and school textbooks, and suggests that although some significant changes have taken place over time, there has been and still is a significant gap between the stated goal and the practice of peace education in Israel. Reasons for this disparity and its implications are discussed and possible directions are proposed for coping with this educational challenge.