The context of the Muslim Palestinian minority in Israel poses important puzzles as for the application of the doctrine of fiqh al-aqalliyyāt. Despite this, the development of fiqh al-aqalliyyāt in the Israeli context provides important insights into the changes facing the Palestinian minority as well as into changing relations between Palestinians in Israel and the State of Israel as a whole. The first part of the article discusses the limitations of applying fiqh al-aqalliyyāt in the context of the Muslim community in Israel. The second part considers multiple references made by sharia court judges to fiqh al-aqalliyyāt and to the principles of wasaṭiyya as useful to find ʻbalancingʼ solutions to address the needs of the contemporary Muslim public and reject accusations of modernisation of Muslim law understood as ʻIsraelisationʼ of sharia and Muslim identity.Key words: fiqh al-aqalliyyāt, Israel, Palestine, Israeli Arabs, Muslim minority, sharia courts, identity