All efforts undertaken so far to establish peace between Israel and the Palestinians have failed to seriously address the right of return of the Palestinian refugees. This failure stemmed from a conviction that the question of historical justice in general had to be avoided. Since justice is a subjective construct, it was argued, allowing it to become a subject of negotiation would only perpetuate the conflict. However, the experience of these peace efforts has shown that without solving the problem of the Palestinian refugees an agreement cannot be reached. And the problem cannot possibly be solved without addressing the key Palestinian demand on this issue — the right of return. For both sides, the right of return, more than any other issue, touches on the essence of their history since the beginning of the conflict between them, and on their future. The national narrative of each side thus centers on its version of the history of the 1948 Arab-Israeli war, in the course of which the Palestinian refugee problem was created. And each side maintains the fundamental belief that its future national existence hinges on whether, and how, the issue of the right of return is resolved. For the Palestinians, the right of return is an inalienable right that defines their national identity and their struggle for liberation. For Israeli Jews, the right of return is perceived as an existential threat to the Jewish character of their society, if not to its very existence. It is not surprising, therefore, that within each of the two societies a national consensus has been built around this issue and that the position of each society seems to stand in complete opposition to that of the other. However, we argue that a morally and politically sound basis could and should be established for a workable solution and that such a basis can be provided by the notion of "transitional justice." Transitional justice stresses two major steps as necessary for reconciliation between parties involved in an historic conflict: recognition and restitution. Recognition entails revealing the historical truth about the injustices committed and according their victims dignity and respect as rights-bearing human beings. Restitution is meant to alleviate some of the material deprivation suffered by the victims and is also a form of recognition. In the Israeli-Palestinian case, recognition by Israel of the right of return would entail its assumption of responsibility for the uprooting of the majority of Palestinian society in 1948. This would satisfy a demand that has become a fundamental element in Palestinian national identity. Recognition would then enable the two parties to enter negotiations over restitution, in particular the implementation of the right of return. In these negotiations, as many Palestinian political leaders have indicated, the concerns of Israeli Jews with their national identity would be taken into account. Only if the fundamental concerns of the two parties, which center on the issue of the right of return, are met can the road towards reconciliation between them be opened.