Unlike many Third World nation minorities living in Western societies, the Palestinians in Israel did not immigrate to the new system; rather, the system was imposed on them by the Israeli Jewish government. This paper argues that the Israeli government uses its hegemony over the educational system for its Palestinian citizens to manipulate and shape their collective identity according to its political interests. According to the paper, the Palestinians are resisting this process, and the consequential unresolved conflict indicates signs of failure of the school as a cultural socialization institution. The paper briefly introduces the process by which the Palestinians in Israel became a national minority and examines the structure of their collective national identity. It discusses aspects of the Palestinian educational system and the way education influences the development of a national and collective identity. The state of Palestinian education is assessed, and the politicization of its goals and curriculum is discussed. Special attention is devoted to informal education as it relates to the process of national identity building. The paper concludes by examining higher education among the Palestinians in Israel and compares it to that of the Israeli Jews and the Palestinians on the West Bank. (Contains a 28-item bibliography.) (BT)