The establishment of full diplomatic relations between Israel and the Holy See (under the terms of a Fundamental Agreement signed in Jerusalem in December 1993) may be viewed as a step of major significance in an historic process of change in the Church's attitude to Judaism and the Jewish people, publicly initiated by the declaration known as Nostra Aetate, issued by the Second Vatican Council in 1965.

In their Fundamental Agreement, Israel and the Holy See noted the "unique nature of the relationship between the Catholic Church and the Jewish people..." and committed themselves to "appropriate cooperation in combating all forms of antisemitism and all kinds of racism and religious intolerance, and in promoting mutual understanding among nations, tolerance among communities and respect for human life and dignity," and "the peaceful resolution of conflicts among states and nations, excluding violence and terror from international life." Additional obligations concern the Status Quo regime affecting the Christian Holy Places, questions relating to freedom of religion, pilgrimage to the Holy Land, and other matters.

In November 1997 an agreement was signed in Jerusalem defining the status of the Catholic Church in Israel and its hierarchy under Israeli law. This marks the first de jure recognition of the Catholic Church by any government in the Holy Land.

In March 2000, Pope John Paul II came to Israel on a personal pilgrimage of the Holy Places, meeting with President Ezer Weizman and Prime Minister Ehud Barak. Other events included meetings with the chief rabbis and visits to Yad Vashem and to the Western Wall. The visit emphasized the continuing process of understanding between Judaism and the Catholic Church.

Pope Benedict XVI visited Israel in May 2009 on a pilgrimage to the Holy Land, marking an important stage in the development of the relationship between the Vatican and Israel. The visit served to strengthen the dialogue between Christianity, Judaism and Islam, as part of the effort to achieve peace in the region.