Despite routine vaccination, Israel experiences recurrent outbreaks of foot and mouth disease (FMD). We analyzed VP1 coding sequences of viruses isolated during FMD outbreaks from 2001 to 2011 in Israel and neighboring nations. The Israeli strains were aligned with strains from neighboring countries in corresponding years, implying repeated FMD virus incursions. In 2007 a large FMD epidemic, caused by a serotype O virus, occurred in Israel. Bayesian analysis of whole-genome sequences of viruses isolated during this epidemic revealed predominant transmission among extensively farmed beef-cattle and small ruminants. Small ruminants were key in spreading to beef-cattle, which then transmitted the virus to feedlot-cattle. Wild gazelles had a minor role in transmission. The results may suggest probable transmission of FMD virus from the Palestinian Authority to Israel. Targeting extensive farms via enhanced surveillance and vaccination could improve FMDV control. Given cross-border transmission, a collaborative FMD mitigation strategy across the Middle-East is crucial.