This paper explores the role that orientalism has played in shaping ethnic inequality among Jews in Israel. Earlier works usually explain ethnic exclusion as a function of Jewish life on Israeli territory. Here, however, exclusion is located within an earlier history of a Jewish encounter with orientalism and Western European colonialism. It is argued that prior to their immigration to Israel, Jews the world-over had been stigmatized as Oriental. Through a complex process, they accepted this stigma, and they arrived in Israel deeply invested in developing the new country as “western “ and uncomfortable with anything identified as “eastern.” It is the imperatives of this westernization “identity project” that account for the initial impetus to exclude Middle Eastern Jews, as well as non-Jewish Arabs, from emerging Israeli society. Viewing history from this perspective, ethnic cleavages in the Jewish world appear to have a historical stability and consistency that is at odds with the current focus on contingency and historical indeterminacy.