Following the 1995 Oslo Agreement and subsequent 1997 Hebron Agreement, Palestinian cities were placed under the exclusive jurisdiction of the Palestinian Authority, with the exception of Hebron, which was split into two sectors: H1 is controlled by the Palestinian Authority and H2 controlled by Israel. Around 120,000 Palestinians live in H1, while around 30,000 Palestinians along with around 700 Israelis remain under Israeli military control in H2.

As of 2009, a total of 86 Jewish families lived in Hebron. The IDF (Israel Defense Forces) may not enter H1 unless under Palestinian escort. Palestinians cannot approach areas where settlers live without special permits from the IDF. The Jewish settlement is widely considered to be illegal by the international community, although the Israeli government disputes this.

The Palestinian population in H2 has greatly declined due to the impact of Israeli security measures which include extended curfews, strict restrictions on movement, the closure of Palestinian commercial activities near settler areas and settler harassment.

Palestinians are barred from using Al-Shuhada Street, a principal commercial thoroughfare. As a result, about half the Arab shops in H2 have gone out of business since 1994.