This joint Palestinian-Israeli study stresses the importance of public opinion in reconciliation processes. It was conducted in the wake of the Arafat-Barak Camp David summit and intended to set up a base-line for sentiments of compromise and reconciliation among Israelis and Palestinians at the peak of the Palestinian- Israeli peace process. The study is based on surveys of representative samples of the Israeli adult population (n = 525) and the Palestinian adult population in the West Bank, the Gaza Strip and East Jerusalem (n = 1,259). It focuses on the role of expectations for lasting peace and democracy in shaping attitudes towards reconciliation and political compromise. Both publics felt that there is no room for further compromise on the most critical issues of the conflict; the majority in both samples believed that their delegations have made too much of a compromise already. A reliable reconciliation scale was devised from a range of steps listed in the reconciliation literature as prerequisites for successful reconciliation following protracted conflicts. Palestinians overwhelmingly supported reconciliation steps, which promise normalization and a chance for economic well- being. They were more reluctant to support steps towards political alliance and ethos-transforming steps. Israelis’ support for all reconciliation measures except for open borders was noticeably higher. Expectations were found to account for reconciliation and compromise sentiments beyond demographic and political- orientation variables for both the Israeli and Palestinian samples.