Life expectancy at birth in Israel in 2001 was 77.7 years for males and 81.6 years for females among Jews, and 74.5 and 77.8 years for males and females, respectively, among Israeli Arabs. In spite of vast improvements in health conditions of the two populations since Israel's statehood in 1948, persistent disparities in life expectancy between the two groups have challenged the Israeli socialized health care system. These disparities are influenced primarily by differences between the two population groups in infant and child mortality rates. This early study suggests that the distribution of life expectancy across localities in Israel reflects the distribution of those localities' socio-economic condition index (not including health and medical care), and the distribution of medical services. The positive association between life expectancy and the index is pronounced, however, only within the Jewish population but not among Arabs. While there may be no significant difference in life expectancy among Jews and Arabs living in poorer communities, there are fewer Arabs living in relatively affluent communities. Thus, persistent higher concentration of poverty among Arabs than among Jews has sufficed to maintain the gap in life expectancy between them. In addition, however, there are population-specific effects: wealth and education are more protective among Jews than among Arabs, while medical services are more protective among Arabs.