AbstractFor nearly 20 years, nongovernmental organizations backing the Palestinian cause have promoted both “differentiation” and the better‐known strategy of boycott, divestment, and sanctions (BDS). Differentiation is the practice of distinguishing between Israel and the occupied territories, terminating contracts with actors—irrespective of nationality—that contribute to and benefit from occupation‐related activities, and seeking to promote Palestinian investments and exports. This strategy is fundamentally different from BDS, which targets not just the occupation but the Israeli state and its national entities. However, this article finds that laws and proposed legislation in the United States, the United Kingdom, and Israel do not delineate between Israel and Israeli‐controlled territory, blurring the line between differentiation and BDS as tools to support Palestine. The evidence shows that courts have mostly ruled against differentiation practices, thus allowing harsh campaigns that impose heavy burdens on NGOs. These costs are both direct, through legal proceedings, and indirect in that they restrict the space for humanitarian action and delegitimize groups that employ differentiation. The study considers whether this constitutes lawfare, defined by experts as the exploitation “of the law of armed conflict to achieve tactical and strategic goals.”