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This article examines the interplay between psychodynamic psychotherapy and other approaches to psychotherapy in mental health services in Israel, describing the history of psychotherapy approaches, education and training, current dilemmas and service examples. Israel has a system of universal healthcare, education and social care which includes mental health services for all citizens and permanent residents. Mental health services and interventions are provided by psychiatrists, clinical psychologists, educational psychologists, social workers, clinical criminologists and creative arts therapists. Despite being public, accessibility is undermined by long waiting times, inequitable geographic distributions and cultural-linguistic barriers. The interplay between approaches is clearly visible in public mental health services. Many therapists are trained primarily in psychodynamic approaches and receive psychodynamic-oriented supervision. However, public services often cannot provide suitable conditions for psychodynamic oriented psychotherapy, and the therapists are required to adjust their interventions to treatment plans, reimbursement and reporting. This paper describes in detail two programs that implement psychodynamic approaches in the medical and education systems respectively. The first is “Lkol Nefesh” (“for every soul”)that provides long-term intensive psychoanalytic psychotherapy for individuals suffering from severe mental disorders. The second is the system of creative arts therapies delivered in schools that provide psychotherapy as part of special education services. The paper concludes with a discussion of the influence of the spirit of time on psychotherapy, and the opposite tendencies evident in the state of affairs of psychodynamic psychotherapy in Israel.