To explore the interrelationship between terrorist acts, terrorist ethnicity, and observer gender and cultural background in Israel, we recruited 211 participants aged 19–75 years. The majority were male (63%). As for the ethnic and religious cultural background, 40% were Jewish, 40% Druze, and 20% Muslim. The participants answered questions about their demographic characteristics, read three scenarios of terrorist acts, addressed attitudes toward terrorists, and suggested the length of imprisonment. We manipulated the type of act (shooting and killing/burning religious institutions/throwing stones at cars) and terrorist ethnicity (Arab/ Jewish). The results indicate significant main effects of the manipulated variables regarding attitudes toward terrorists. Also, Muslim Arab participants expressed more negative attitudes in cases of Jewish terrorists than Arab terrorists, whereas Jewish participants expressed more negative attitudes toward Arab terrorists than Jewish terrorists. Druze participants did not differentiate between Arab and Jewish terrorists. Furthermore, in cases of Arab perpetrators, Jewish participants suggested imprisonment terms 2.4 times longer than in cases of Jewish perpetrators. The discussion addresses the findings in the context of social identity theory and dual social identification. Regarding practical implications, the findings imply the need for education and training on ethnic bias among policymakers and practitioners.