Jewish immigration and Nazi propaganda contributed to the large-scale 1936–1939 Arab revolt in Palestine, a largely nationalist uprising directed at ending British rule. The British responded to the revolt with the Peel Commission (1936–37), a public inquiry that recommended that an exclusively Jewish territory be created in the Galilee and western coast (including the population transfer of 225,000 Arabs); the rest becoming an exclusively Arab area. The two main Jewish leaders, Chaim Weizmann and David Ben-Gurion, had convinced the Zionist Congress to approve equivocally the Peel recommendations as a basis for more negotiation. The plan was rejected outright by the Palestinian Arab leadership and they renewed the revolt, which caused the British to appease the Arabs, and to abandon the plan as unworkable.

In 1938, the US called an international conference to address the question of the vast numbers of Jews trying to escape Europe. Britain made its attendance contingent on Palestine being kept out of the discussion. No Jewish representatives were invited. The Nazis proposed their own solution: that the Jews of Europe be shipped to Madagascar (the Madagascar Plan). The agreement proved fruitless, and the Jews were stuck in Europe.

With millions of Jews trying to leave Europe and every country in the world closed to Jewish migration, the British decided to close Palestine. The White Paper of 1939, recommended that an independent Palestine, governed jointly by Arabs and Jews, be established within 10 years. The White Paper agreed to allow 75,000 Jewish immigrants into Palestine over the period 1940–44, after which migration would require Arab approval. Both the Arab and Jewish leadership rejected the White Paper. In March 1940 the British High Commissioner for Palestine issued an edict banning Jews from purchasing land in 95% of Palestine. Jews now resorted to illegal immigration: (Aliyah Bet or "Ha'apalah"), often organized by the Mossad Le'aliyah Bet and the Irgun. With no outside help and no countries ready to admit them, very few Jews managed to escape Europe between 1939 and 1945.