The armistice agreement signed between Israel and Jordan in April 1949 ended hostilities on the Jordanian front in the War of Independence. An adjustment to the agreement led to the division of the Arab village of Bet Tzafafa on the southern outskirts of Jerusalem. Its northern part was incorporated into the municipal jurisdiction of the Israeli sector of the divided Jerusalem and until the Six Day War was its only non-Jewish neighborhood. During the first two decades of Israel`s existence, which were years of heightened suspicion towards, and restrictions placed on, the country`s Arab minority, Bet Tzafafa remained one of a few places not to come under the military administration which was applied to most Arab locales (1948-1966). But while its residents enjoyed more freedoms and opportunities than other Israeli Arabs, their ethnicity, national affiliations and close proximity to the armistice line were cause for an ambivalent attitude towards them on behalf of government ministries, the Jewish Agency, the Jerusalem municipality, the security establishment as well as Jewish Jerusalemites. As far as authorities were concerned, a general notion of distrust towards the village`s residents was coupled with a practical consideration of their needs. The village`s reality of development and arrested development is meticulously analyzed for the first time using primary archival material. A critical analysis of the documents allows a better understanding of the village`s recent history and helps to place it in the wider contexts of Israel`s relations with its Arab minority in early statehood.