China’s expanded global presence has increased the flashpoints where its interests are at odds with those of the United States. As the broader US-China relationship moves in a more adversarial direction, these areas of friction could easily escalate into conflict. This paper examines the prospects for growing tension and possible conflict between the US and China in the Middle East, and offers a path to peaceful coexistence in the region. The paper begins by documenting the dramatic growth in Chinese investment, construction, and trade in the Middle East. China’s energy needs, as well as its geostrategic plans to expand its influence in Central Asia and Southwest Asia, suggest that its presence in the Middle East will continue to grow. The paper also examines the US position in the region and analyzes the growing economic and political pressures that will likely lead to a reduced US presence in the future. Drawing on the theoretical literature on great power transitions in international affairs, the paper observes that the process of an incumbent great power accommodating a rising power in a region of strategic value to both can often lead to conflict. It traces how a great power conflict between the US and China might unfold in the Middle East, particularly with regard to Iran. It then proposes a strategy for reducing the likelihood of conflict through cooperation on issues of shared interest, including freedom of navigation through the region’s waterways and reduction of violence in Yemen. It explains how this cooperation could develop, based on previous examples of great power cooperation in the Middle East and elsewhere. It argues that gradually broadening cooperation on areas of shared concern could aggregate over time into a framework that manages the expansion of Chinese power in the Middle East in a constructive manner. The paper proposes a path toward structured competition and selective cooperation between the US and China in the Middle East, rather than unbridled and unpredictable rivalry. The paper utilizes a variety of US and Chinese sources including trade and investment data, speeches by senior officials, data on troop and naval deployments, and policy documents by both governments.