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The Palestinian refugee problem arose in the wake of founding of Israel. The 1948 Arab-Israeli War made refugees out of approximately 750,000 Arabs living in what was then called Palestine, in an event called by some historians "the Palestinian Exodus".

These refugees, the great majority of whom had lived there for generations. were not able to return home. Some emigrated to other countries, such as the U.S. and Canada; many remain in refugee camps to this day.

The situation of the Palestinian Arab refugees is one of the world's largest and most enduring refugee problems. Discussions on allowing them to return to their former homes within Israel, to receive compensation or be resettled in new locations have yet to reach a definite conclusion.

Whereas most refugees are the concern of UN High Commissioner for Refugees (UNHCR), Palestinian refugees come under United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). On December 11, 1948, UN Resolution 194 was passed in order to protect the rights of Palestinian Arab refugees. Resolution 302 (IV) of 8 December, 1949, set up UNRWA specifically to deal with the Palestinian problem.

The term Palestinian refugee is generally applied differently than the term refugee is commonly used. That is, only to those who have left a country by force or due to persecution. Palestinian refugee is defined by the U.N. as "persons whose normal place of residence was Palestine between June 1946 and May 1948" and left the area for any reason connected to the 1948 Arab-Israeli War, including voluntarily and regardless of their place of residence before June 1946. Hence, refugee status was also given to a minority of peoples who had only recently moved to the area, although the majority of refugees had been present since at least the 1920s. This differs from the normal definition of refugee which, according to the 1951 Geneva Convention (Article 1A(2)) is applied to a person who: "owing to well founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his[/her] nationality and is unable or, owing to such fear, is unwilling to avail himself[/herself] of the protection of his country; or who, not having a nationality and being outside the country of his[/her] former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it."

Also out of the ordinary involving Palestinian refugees is that the term applies to any offspring of the original refugees, who unlike normal refugees live in camps indefinitely without any attempt by surrounding governments to, as Article IV, Section D of the 1951 Geneva Convention relating to the status of Refugees states "to receive refugees in their territories and that they act in concert in a true spirit of international cooperation in order that these refugees may find asylum and the possibility of resettlement." This has created a large-scale humanitarian catastropher within these refugee camps, as the population continues to grow and conditions do not improve. It should be noted that the typical definition of refugee is sometimes awarded to children of original typical refugees, if no other alternative is found.

For many Arab countries, the Palestinian issue is the main obstacle in their recognition of Israel. However, some observers believe that they also exploit the issue. UNRWA's Ralph Galloway has stated that "The Arab states do not want to solve the refugee problem. They want to keep it as an open sore, as an affront to the United Nations, and as a weapon against Israel. Arab leaders do not give a damn whether Arab refugees live or die." Jordanian MP Abd'Allah Nawass once put it this way: "We shall be most insistent in perpetuating the Palestine problem as a life question ... The Palestine war continues by dint of the refugees only. Their existence leaves the problem open." (1952)

Israeli objections to the return of Palestinian Arabs to Israel include:

Israel was founded as a Jewish state to provide refuge to Jewish people, regardless of their ethnicity or previous nationality. To allow all Palestinian Arabs and their descendants, who have been bred on 50+ years of denial of the right of Israel to exist, to return home, would mean that Israel would cease to exist as a Jewish state.

After the UN partition of Palestine, the Arab countries declared war on Israel. Most Israelis believe that the Arab countries are responsible for the fact that there were refugees on either side, including areas not part of the Jewish state in the partition plan. They believe that the Arab countries should have absorbed the Arab refugees.

Approximately 900,000 Jews left Arab countries between 1945 and 1956, and Israel took in 600,000 of them. Some of these Jewish refugees were forced to abandon their property, hence there is a quid pro quo.

There are very few Arabs whose views are compatible with the Israeli viewpoint:

Many Palestinians agree that some Arab regimes have not treated them as well as they should.

Most Arabs object to the Israeli viewpoint:

Palestinians claim that the fact that there are others who claim refugee status in the world does not limit their right of return.

See further