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We present what the current state of affairs in Israel concerning psychoanalytic psychotherapy. First, we present a succinct historical account of the unfolding of the psychoanalytic perspective (including psychoanalysis and psychoanalytic psychotherapy) in Israel, with a particular focus on its contentious relationship with other psychotherapy schools of thought. We then locate a two-decade-long developmental process, culminating with the hegemony of the psychoanalytic school within Israeli psychiatry, psychology and psychotherapy, leading to strife and a political fight within the psychology profession to diffuse this hegemony. Somewhat paradoxically, that this fight succeeded eventually has led to the growth of Israeli psychoanalysis. The psychoanalytic school - and psychoanalytic psychotherapy - are now more accessible to applied psychology disciplines beyond clinical psychology (i.e., applied-developmental, educational, rehabilitative, and medical psychology), and psychoanalytic thought informs both the theory and practice of other, non-psychoanalytic schools of psychotherapy (e.g., cognitive-behavioral therapy/CBT). Psychoanalytic training programs are flourishing, and three research universities currently offer a Doctor of Philosophy (Ph.D.) degree in psychoanalytic theory. Psychoanalysis and psychoanalytic psychology also impact the political activism. Future concerns are also discussed, primarily the shrinking (but still very vibrant) representation of psychoanalytic psychotherapy within departments of psychology at research universities in Israel.