Exposure to political terror and its psychological toll were assessed in 276 Israeli Palestinian and 1,469 Jewish adolescents using self-report questionnaires. Israeli Palestinians displayed more posttraumatic symptoms, higher levels of objective exposure to terror, more negative life events, lower ability to forgive, and a higher need for vengeance than their Jewish counterparts. Although the two groups did not differ in fear levels, Israeli Palestinians expressed more favorable attitudes toward peace. Ethnicity played a major role in explaining the variance of posttraumatic symptomatology. Israeli Palestinians displayed increased vulnerability to mental distress when compared to their Jewish counterparts. The unique roles of subjective fear, attitudes towards peace, forgiveness, and revenge among Israeli Palestinians are discussed.