On 3 August 2011, the Chairman of the Foreign Affairs and Defense Committee, Avi Dichter, together with 39 other Knesset members, filed the Basic Law proposal: Israel as the Nation-State of the Jewish People which seeks to determine the nature of the state of Israel as the Jewish people, and as such it interprets the term "Jewish and democratic state" which appears in the Israeli basic laws Freedom of Occupation and Human Dignity and Liberty.

In July 2017, a special Joint committee headed by MK Amir Ohana (Likud) was formed to revive the Nation-State Bill, which was then approved for a first reading on 13 March 2018.

The committee oversaw a number of changes, mostly regarding articles such as the "Hebrew Law", "Ingathering of the Exiles", and "Jewish Settlement", replacing an earlier version that would have enabled the state to allow groups to establish separate communities "on the basis of religion and nationality" with a version that emphasised "developing Jewish communities a national value, and will act to encourage, promote, and establish them".Upon presenting the reformed bill, Chairman Ohana stated: "This is the law of all laws. It is the most important law in the history of the State of Israel, which says that everyone has human rights, but national rights in Israel belong only to the Jewish people. That is the founding principle on which the state was established". Minister Yariv Levin, a strong backer of the proposal, called it "Zionism's flagship bill... it will bring order, clarify what is taken for granted, and put Israel back on the right path. A country that is different from all others in one way, that it is the nation-state of the Jewish people."On 1 May 2018, the Knesset passed the Nation-State Bill, with a majority of 64 voting in favor of the bill and 50 against in its first reading. On 19 July 2018, after a stormy debate which lasted for hours, the Knesset approved the Nation-State Bill in second and third readings by a vote of 62 in favor, 55 against and two abstentions.Following the vote, members of the Joint List tore up a printed text of the law while shouting out "Apartheid" on the floor of the Knesset. MKs from the coalition, on the other hand, applauded the passing of the legislation.

The Basic Law comprises eleven clauses, as follows:1 — Basic Principles

A. The land of Israel is the historical homeland of the Jewish people, in which the State of Israel was established.

B. The State of Israel is the national home of the Jewish people, in which it fulfills its natural, cultural, religious, and historical right to self-determination.

C. The right to exercise national self-determination in the State of Israel is unique to the Jewish people.

2 — Symbols of the State

A. The name of the state is "Israel".

B. The state flag is white, with two blue stripes near the edges and a blue Star of David in the center.

C. The state emblem is a seven-branched menorah with olive leaves on both sides and the word "Israel" beneath it.

D. The state anthem is "Hatikvah".

E. Details regarding state symbols will be determined by the law.

3 — Capital of the State

Jerusalem, complete and united, is the capital of Israel.

4 — Language

A. The state's language is Hebrew.

B. The Arabic language has a special status in the state; Regulating the use of Arabic in state institutions or by them will be set in law.

C. This clause does not harm the status given to the Arabic language before this law came into effect.

5 — Ingathering of the Exiles

The state will be open for Jewish immigration and the ingathering of exiles.

6 — Connection to the Jewish people

A. The state will strive to ensure the safety of the members of the Jewish people and of its citizens in trouble or in captivity due to the fact of their Jewishness or their citizenship.

B. The state shall act within the Diaspora to strengthen the affinity between the state and members of the Jewish people.

C. The state shall act to preserve the cultural, historical, and religious heritage of the Jewish people among Jews in the Diaspora.

7 — Jewish Settlement

A. The state views the development of Jewish settlement as a national value and will act to encourage and promote its establishment and consolidation.

8 — Official Calendar

The Hebrew calendar is the official calendar of the state and alongside it the Gregorian calendar will be used as an official calendar. Use of the Hebrew calendar and the Gregorian calendar will be determined by law.

9 — Independence Day and Memorial Days

A. Independence Day is the official national holiday of the state.

B. Memorial Day for the Fallen in Israel's Wars and Holocaust and Heroism Remembrance Day are official memorial days of the State.

10 — Days of Rest and Sabbath

The Sabbath and the festivals of Israel are the established days of rest in the state; Non-Jews have a right to maintain days of rest on their Sabbaths and festivals; Details of this issue will be determined by law.

11 — Immutability

This Basic Law shall not be amended, unless by another Basic Law passed by a majority of Knesset members.

In July 2018 Member of Knesset Akram Hasson (Kulanu) and other Israeli Druze officials filed a petition with the Supreme Court of Israel challenging the constitutionality of the law. This was followed in January 2019 by a petition filed by the Association for Civil Rights in Israel. The Supreme Court announced that challenges to the constitutionality of the law would be heard by an 11-justice panel and would decide if the law, in whole or in part, violates the Basic Law: Human Dignity and Liberty, considered the country’s foundational legal basis. The hearing would be the first time the Supreme Court addressed the question of whether it has the authority to strike down another Basic Law in whole or in part on such a basis.The Supreme Court issued its decision on the constitutionality of the law in July 2021. In a 10-1 ruling, the court declared that the law was constitutional and did not negate the state’s democratic character. Writing the opinion for the majority, President of the Court, Esther Hayut, stated that "This basic law is but one chapter in our constitution taking shape and it does not negate Israel's character as a democratic state." The court's majority opinion concurred with arguments that the law merely declares the obvious — that Israel is a Jewish state — and that this does not detract from the individual rights of non-Jewish citizens, especially in light of other laws that ensure equal rights to all. The lone dissenting judge was Justice George Karra, an Arab member of the court.In a separate case, in November 2020, an Israeli magistrate's court ruled, based on the law as justification, that the northern city of Karmiel was a "Jewish city", and that Arabic-language schools or funding transport for Arab schoolchildren would be liable to alter the city’s demographic balance and damage its character. The ruling essentially blocked access to schools for Arab children in Karmiel. The court implied that facilitating this access would incentivize Palestinian Arab citizens of Israel to move into the city, thus damaging its "Jewish character." Israel's attorney general opposed the ruling and stated that the court had interpreted the law incorrectly. Upon appeal, the Haifa District Court ruled that the lower court's initial dismissal of the claims for funding and transportation were an inappropriate application of the Nation-State law, and called the decision "fundamentally wrong."

Controversy has surrounded the Basic Law since it was first proposed in 2011. Prominent Israeli political, especially from the left of the political spectrum, and academic figures, such as Professor Amnon Rubinstein, have been highly critical, and frequent references have been made to the potential harm that the passage of the law's bill could do to Israel's democracy and the rights of its minorities.The proposal has even been criticized by people affiliated with the Israeli Right, such as the Minister and Likud Party MK Benny Begin. Critics have argued that the proposed law raises difficult questions concerning the definition of Israel as a Jewish and democratic state, and it may upset the delicate balance between the state's Jewish character and state's democratic character.

On 20 November 2011, a special discussion was held on the matter at the George Shultz Roundtable Forum which was sponsored by the Israeli Democracy Institute, and was attended by Avi Dichter and various Israeli public figures and prominent academic figures.Prime Minister of Israel, Benjamin Netanyahu, defended his draft of the Nation-State bill on 26 November 2014, declaring Israel to be "The nation-state of the Jewish people, and the Jewish people alone". He also clarified: "I want a state of one nation: the Jewish nation-state, which includes non-Jews with equal rights." Being the land of the Jewish people, the PM is of the opinion that Israel is thus entitled to principles that combine the nation and the state of the Jewish people and grant "equal rights for all its citizens, without discrimination against religion, race, or sex".In August 2011, several Knesset members who had initially signaled their support for the bill subsequently withdrew their support after controversy arose over the downgrading of the Arabic language and concerns that the bill would fail to properly enshrine minority rights.MK Shlomo Molla (Kadima) conditioned his signature, stating: "Israel is the national home of the Jewish people, that much is clear. But at the same time, when we are the Jewish majority, the rights of the minority must also be enshrined in the Basic Law and they need legal protection. Without the completion of such a Basic Law, it has no moral validity. Nor will antagonism arise."MK Avi Dichter (Likud) countered that the law only enshrined an existing situation, noting: "Court rulings deal constantly with the permanent status of the language: the Hebrew language is defined as a language with a higher status than the Arabic language, and as the state's official language. Arabic on the other hand suffers from constant blurring of its status and lack of clarity about its accessibility to the native speakers of the language. According to the bill proposal, the Arabic language would receive a special status which would require the state to enable accessibility to all native speakers of the language."In an open letter, Reuven Rivlin, Israel's president, raised his concern over an earlier draft of the legislation, saying it "could harm the Jewish people worldwide and in Israel, and could even be used as a weapon by our enemies". To register his displeasure with the law, Rivlin, fulfilling his duty as president to sign all laws by the Knesset, signed his name in Arabic.Responding to Arab legislators who objected to the proposed basic law, MK Avi Dichter, said that, "The most you can do is to live among us as a national minority that enjoys equal individual rights, but not equality as a national minority."In an interview with Haaretz, Tourism Minister Yariv Levin, who supervised the passage of the law, said that, "Through the law, we can prevent family reunification [of Israeli citizens and Palestinians] not only out of security motives, but also motivated to maintain the character of the country as the national homeland of the Jewish people." He also insisted to reject the inclusion of equality in the legislation to avoid undermining the Law of Return.