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During Israeli military operations in the camp, Palestinian sources alleged that a massacre of hundreds of people had taken place. A senior Palestinian Authority official alleged in mid-April that some 500 had been killed. During the fighting in Jenin, Israeli officials had also initially estimated hundreds of Palestinian deaths, but later said they expected the Palestinian toll to reach "45 to 55." In the ensuing controversy, Israel blocked the United Nations from conducting the first-hand inquiry unanimously sought by the Security Council, but the UN nonetheless felt able to dismiss claims of a massacre in its report, which said there had been approximately 52 deaths, criticising both sides for placing Palestinian civilians at risk. Based on their own investigations, Amnesty International and Human Rights Watch charged that some IDF personnel in Jenin had committed war crimes but also confirmed that no massacre had been committed by the IDF. Both human rights organizations called for official inquiries; the IDF disputed the charges.
After the battle, most sources, including the IDF and Palestinian Authority, placed the Palestinian death toll at 52–56; Human Rights Watch documented 52 Palestinian deaths and claimed that it included at least 27 militants and 22 civilians, and an additional 3 Palestinians whose status as militants or civilians could not be ascertained, while the IDF said that 48 militants and 5 civilians had been killed. According to Human Rights Watch, 140 buildings had been destroyed. The IDF reported that 23 Israeli soldiers had been killed and 75 wounded during the battle.
From 2 April to 10 May, a stand-off developed at the Church of the Nativity in Bethlehem. IDF soldiers surrounded the church while Palestinian civilians, militants, and priests were inside. During the siege, IDF snipers killed 8 militants inside the church and wounded more than 40 people. The stand-off was resolved by the deportation to Europe of 13 Palestinian militants whom the IDF had identified as terrorists, and the IDF ended its 38-day stand-off with the militants inside the church.
Following an Israeli intelligence report stating that Yasir Arafat had paid $20,000 to al-Aqsa Martyrs' Brigades, the United States demanded democratic reforms in the Palestinian Authority, as well the appointment of a prime minister independent of Arafat. On 13 March 2003, following U.S. pressure, Arafat appointed Mahmoud Abbas as Palestinian prime minister.
Following the appointment of Abbas, the U.S. administration promoted the Road map for peace—the Quartet's plan to end the Israeli–Palestinian conflict by disbanding militant organizations, halting settlement activity and establishing a democratic and peaceful Palestinian state. The first phase of the plan demanded that the Palestinian Authority suppress guerrilla and terrorist attacks and confiscate illegal weapons. Unable or unwilling to confront militant organizations and risk civil war, Abbas tried to reach a temporary cease-fire agreement with the militant factions and asked them to halt attacks on Israeli civilians.
On 20 May, Israeli naval commandos intercepted another vessel, the Abu Hassan, on course to the Gaza Strip from Lebanon. It was loaded with rockets, weapons, and ammunition. Eight crew members on board were arrested including a senior Hezbollah member.
On 29 June 2003, a temporary armistice was unilaterally declared by Fatah, Hamas and Islamic Jihad, which declared a ceasefire and halt to all attacks against Israel for a period of three months. Violence decreased somewhat in the following month, but suicide bombings against Israeli civilians continued as well as Israeli operations against militants.
Four Palestinians, three of them militants, were killed in gun battles during an IDF raid of Askar near Nablus involving tanks and armoured personnel carriers (APCs); an Israeli soldier was killed by one of the militants. Nearby Palestinians claimed a squad of Israeli police disguised as Palestinian labourers opened fire on Abbedullah Qawasameh as he left a Hebron mosque. YAMAM, the Israeli counter-terrorism police unit that performed the operation, said Qawasemah opened fire on them as they attempted to arrest him.
On 19 August, Hamas coordinated a suicide attack on a crowded bus in Jerusalem killing 23 Israeli civilians, including 7 children. Hamas claimed it was a retaliation for the killing of five Palestinians (including Hamas leader Abbedullah Qawasameh) earlier in the week. U.S. and Israeli media outlets frequently referred to the bus bombing as shattering the quiet and bringing an end to the ceasefire.
Following the Hamas bus attack, Israeli Defence Forces were ordered to kill or capture all Hamas leaders in Hebron and the Gaza Strip. The plotters of the bus suicide bombing were all captured or killed and Hamas leadership in Hebron was badly damaged by the IDF. Strict curfews were enforced in Nablus, Jenin, and Tulkarem; the Nablus lockdown lasted for over 100 days. In Nazlet 'Issa, over 60 shops were destroyed by Israeli civil administration bulldozers. The Israeli civil administration explained that the shops were demolished because they were built without a permit. Palestinians consider Israeli military curfews and property destruction to constitute collective punishment against innocent Palestinians.
Unable to rule effectively under Arafat, Abbas resigned in September 2003. Ahmed Qurei (Abu Ala) was appointed to replace him. The Israeli government gave up hope for negotiated settlement to the conflict and pursued a unilateral policy of physically separating Israel from Palestinian communities by beginning construction on the Israeli West Bank barrier. Israel claims the barrier is necessary to prevent Palestinian attackers from entering Israeli cities. Palestinians claim the barrier separates Palestinian communities from each other and that the construction plan is a de facto annexation of Palestinian territory.
Following a 4 October suicide bombing in Maxim restaurant, Haifa, which claimed the lives of 21 Israelis, Israel claimed that Syria and Iran sponsored the Islamic Jihad and Hezbollah, and were responsible for the terrorist attack. The day after the Maxim massacre, IAF warplanes bombed an alleged former Palestinian training base at Ain Saheb, Syria, which had been mostly abandoned since the 1980s. Munitions being stored on the site were destroyed, and a civilian guard was injured.
In response to repeated shelling of Israeli communities with Qassam rockets and mortar shells from Gaza, the IDF operated mainly in Rafah – to search and destroy smuggling tunnels used by militants to obtain weapons, ammunition, fugitives, cigarettes, car parts, electrical goods, foreign currency, gold, drugs, and cloth from Egypt. Between September 2000 and May 2004, ninety tunnels connecting Egypt and the Gaza Strip were found and destroyed. Raids in Rafah left many families homeless. Israel's official stance is that their houses were captured by militants and were destroyed during battles with IDF forces. Many of these houses are abandoned due to Israeli incursions and later destroyed. According to Human Rights Watch, over 1,500 houses were destroyed to create a large buffer zone in the city, many "in the absence of military necessity", displacing around sixteen thousand people.
On 2 February 2004, Israeli Prime Minister Ariel Sharon announced his plan to transfer all the Jewish settlers from the Gaza Strip. The Israeli opposition dismissed his announcement as "media spin", but the Israeli Labour Party said it would support such a move. Sharon's right-wing coalition partners National Religious Party and National Union rejected the plan and vowed to quit the government if it were implemented. Yossi Beilin, peace advocate and architect of the Oslo Accords and the Geneva Accord, also rejected the proposed withdrawal plan. He claimed that withdrawing from the Gaza Strip without a peace agreement would reward terror.
Following the declaration of the disengagement plan by Ariel Sharon and as a response to suicide attacks on Erez crossing and Ashdod seaport (10 people were killed), the IDF launched a series of armored raids on the Gaza Strip (mainly Rafah and refugee camps around Gaza), killing about 70 Hamas militants. On 22 March 2004, an Israeli helicopter gunship killed Hamas leader Sheikh Ahmed Yassin, along with his two bodyguards and nine bystanders. On 17 April, after several failed attempts by Hamas to commit suicide bombings and a successful one that killed an Israeli policeman, Yassin's successor, Abdel Aziz al-Rantissi, was killed in an almost identical way, along with a bodyguard and his son Mohammed.
The fighting in Gaza Strip escalated severely in May 2004 after several failed attempts to attack Israeli checkpoints such as Erez crossing and Karni crossing. On 2 May, Palestinian militants attacked and shot dead a pregnant woman and her four young daughters. Amnesty International classified it as a crime against humanity and said it "reiterates its call on all Palestinian armed groups to put an immediate end to the deliberate targeting of Israeli civilians, in Israel and in the Occupied Territories". Additionally, on 11 and 12 May, Palestinian militants destroyed two IDF M-113 APCs, killing 13 soldiers and mutilating their bodies. The IDF launched two raids to recover the bodies, killing 20–40 Palestinians and greatly damaging structures in the Zaitoun neighbourhood in Gaza and in south-west Rafah.
Subsequently, on 18 May the IDF launched Operation Rainbow with a stated aim of striking the militant infrastructure of Rafah, destroying smuggling tunnels, and stopping a shipment of SA-7 missiles and improved anti-tank weapons. A total of 41 Palestinian militants and 12 civilians were killed in the operation, and about 45–56 Palestinian structures were demolished. Israeli tanks shelled hundreds of Palestinian protesters approaching their positions, killing 10. The protesters had disregarded Israeli warnings to turn back. This incident led to a worldwide outcry against the operation.
On 29 September, after a Qassam rocket hit the Israeli town of Sderot and killed two Israeli children, the IDF launched Operation Days of Penitence in the north of the Gaza Strip. The operation's stated aim was to remove the threat of Qassam rockets from Sderot and kill the Hamas militants launching them. The operation ended on 16 October, after having caused widespread destruction and the deaths of over 100 Palestinians, at least 20 of whom were under the age of sixteen. The IDF killed thirteen-year-old Iman Darweesh Al Hams as she strayed into a closed military area; the commander was accused of allegedly firing his automatic weapon at her dead body deliberately to verify the death. The act was investigated by the IDF, but the commander was cleared of all wrongdoing, and more recently, was fully vindicated when a Jerusalem district court found the claim to be libellous, ruled that NIS 300,000 be paid by the journalist and TV company responsible for the report, an additional NIS 80,000 to be paid in legal fees and required the journalist and television company to air a correction. According to Palestinian medics, Israeli forces killed at least 62 militants and 42 other Palestinians believed to be civilians. According to a count performed by Haaretz, 87 militants and 42 civilians were killed. Palestinian refugee camps were heavily damaged by the Israeli assault. The IDF announced that at least 12 Qassam launchings had been thwarted and many terrorists hit during the operation.
On 21 October, the Israeli Air Force killed Adnan al-Ghoul, a senior Hamas bomb maker and the inventor of the Qassam rocket.
On 11 November, Yasser Arafat died in Paris.