The present study aims to examine the impact of encounter between two different ethnic groups, Jews and Arabs, of Israeli first-year graduate students who study in four colleges of education, on the development of their intercultural competence: (1) knowledge regarding the “other,” (2) change in attitudes and behavior towards the other, and (3) multicultural educational practice. The findings point to two clear factors affecting the development of intercultural competence: the formal and informal college experience as reported by respondents, particularly the contents and tools that both Jews and Arabs acquired at the college in addition to personal characteristics and off-campus encounters.