ResearchAbstarcts This research examined the impact of the Israeli-Palestinian peace treaty and Palestinian children's perception of it on their self-esteem and neuroticism. We also studied the relative importance of earlier exposure to traumatic experiences and psycho social resources indicated by the children's creativity, intelligence and political activity in influencing their psychological well-being after the peace treaty. The sample used was a follow-up group of 64 Palestinian children of 11-12 years of age, living in the Gaza Strip. The result showed that the level of neuroticism was significantly related to high neuroticism and low self-esteem after the peace treaty. Acceptance of the treaty and participating in the subsequent festivities mitigated the negative impact of the traumatic experiences on their well-being . Increased neuroticism and decreased self-esteem were found only among children who refused to accept the peace treaty and did not participate in the festivities. Creativity and Intifada activity promoted their post-peace treaty well-being, in terms of psycho social resources. The more creative the children were the more their neurotic symptoms decreased because of the treaty and the higher self-esteem they had after it. The more active the children were during the Intifada the more their self-esteem increased because of the treaty.