This article is an attempt to show the impact of demographic processes on the Israeli-Palestinian conflict. The author characterized and described the demographic processes occurring in both communities. The study highlighs the importance of increasing proportion of non-Jewish citizens of Israel. A demand to recognize Israel as a Jewish state has been analysed. The article also describes a proposal to resolve the conflict through the creation of one state for two nations. The author also shows how demographics will affect relations between the two communities in the future.