- Objectives Ethnic inequalities in health (EIH) are unjust public health problem that emerge across societies. In Israel, despite uniform healthcare coverage, marked EIH persist between Arabs and Jews. Methods We draw on the ecosocial approach to examine the relative contributions of individual socioeconomic status (SES), psychosocial and health behavioral factors, and the living environment (neighborhood problems, social capital, and social participation) to explaining ethnic differences in self-rated health (SRH). Data were derived from two nationwide studies conducted in 2004–2005 of stratified samples of Arabs (N = 902) and Jews (N = 1087). ResultsPoor SRH was significantly higher among Arabs after adjustment for age and gender [odds ratio and 95% confidence interval (CI) = 1.94 (1.57–2.40)]. This association was reversed following adjustment for all possible mediators: OR (95% CI) = 0.70(0.53–0.92). The relative contribution of SES and the living environment was sizable, each attenuating the EIH by 40%, psychosocial factors by 25%, and health behaviors by 16%. Conclusions Arabs in Israel have poorer SRH than Jews. Polices to reduce this inequality should mainly focus on improving the SES and the living conditions of the Arabs, which might enhance health behaviors and well-being.