[also called Ramadan War or October War]

The October 1973 War (known in Israel as the Yom Kippur War and in the Arab world as the Ramadan War) developed rapidly, and the coordinated Egyptian-Syrian offensive caught Israel by surprise. On September 28, Palestinian guerrillas detained an Austrian train carrying Soviet Jews en route to Israel. Subsequent Egyptian and Syrian military deployments were interpreted by Israel as defensive actions in anticipation of Israeli reprisals. For one week, Israel postponed mobilizing its troops. Not until the morning of Yom Kippur (October 6), about six hours before the Arab offensive, were Israeli officials convinced that war was imminent; a mobilization of the reserves was then ordered. In the early days of the war, the IDF suffered heavy losses as Egyptian forces crossed the Suez Canal and overran Israeli strongholds, while Syrians marched deep into the Golan Heights. Israel launched its counteroffensive first against the Syrian front, and only when it had pushed the Syrians back well east of the 1967 cease-fire line (by October 15) did Israel turn its attention to the Egyptian front. In ten days of fighting, Israel pushed the Egyptian army back across the canal, and the IDF made deep incursions into Egypt. On October 24, with Israeli soldiers about one kilometer from the main Cairo-Ismailia highway and the Soviet Union threatening direct military intervention, the UN imposed a cease-fire.

After several months of negotiations, during which sporadic fighting continued, Israel reached a disengagement agreement in January 1974, whereby the IDF withdrew across the canal and Israeli and Egyptian troops were separated in the Sinai by a UNEF-manned buffer zone. Israel signed a similar agreement with Syria on May 31, 1974, whereby Israel withdrew to the 1967 cease-fire line in the Golan Heights and a United Nations Disengagement Observer Force (UNDOF) occupied a buffer zone between Israeli and Syrian forces. On September 4, 1975, after further negotiations, the Second Sinai Disengagement Agreement was signed between Egypt and Israel that widened the buffer zone and secured a further Israeli withdrawal to the east of the strategic Gidi and Mitla passes.

Israel's military victory in 1973 came at a heavy price of more than 2,400 lives and an estimated US$5 billion in equipment, of which more than US$1 billion was airlifted by the United States during the war when it became apparent that Israel's ammunition stores were dangerously low. This action, and the threatened Soviet intervention, raised more clearly than ever the specter of the Arab-Israeli conflict escalating rapidly into a confrontation between the superpowers. The October 1973 War also cost Israel its self-confidence in its military superiority over its Arab enemy. The government appointed a special commission, headed by Chief Justice Shimon Agranat, president of the Israeli Supreme Court, to investigate why Israel had been caught by surprise and why so much had gone wrong during the war itself. The commission's report, completed in January 1975, was highly critical of the performance of the IDF on several levels, including intelligence gathering, discipline within the ranks, and the mobilization of reserves. The euphoria of the post-1967 era faded.