A small proportion of Palestinians displaced in 1948 took refuge in Egypt, and only a tiny fraction sent students to study at the American University in Cairo. But if AUC was marginal to the cause of Palestine and the Palestinians, the inverse was not true. The war and the plight of Palestinian students confronted the university administration with several major problems. These arose from AUC’s American roots at a time of anger toward the U.S.; the president’s commitment to remain apolitical in the face of a politically aroused staff and student body; and the institution’s scarce resources over against a deluge of requests for aid. This paper explores the “resolution” of these conflicts, detailing the constraints within which AUC operated and the problems of its Palestinian students, 1948-1958. Three sets of research questions guide this study. (1) What was AUC’s status in Egypt and the Arab world, and what was the place of Palestinians at AUC? (2) What position did AUC take toward the Palestine conflict? (3) What problems did Palestinian students face, and how did AUC respond? Primary sources include Board of Trustees records; papers of President John Badeau; the campus newspaper, Caravan; and contemporary Egyptian newspapers. Secondary literature includes research on Palestinians in Egypt, especially the work of Oroub El-Abed. The documents show that, by the 1940s, AUC’s leadership detected a shift in public opinion, accepting the institution as a “normal place for Arabic-speaking youth to take university study.” Enrollments grew; Palestinians represented the second largest national contingent and were prominent in campus activities and as alumni. But the “normalization” of AUC was jeopardized by Arab anger at the U.S. over Palestine. Under internal and external pressure, President John Badeau broke with tradition to criticize U.S. actions toward Palestine, in May 1948. Moreover, the Dean, Worth Howard, declared that AUC had “an inescapable responsibility” to help students whose family assets had been lost in the Nakba. University records document the provenance, family situations, and current status of its Palestinian students. Over 50 students were given substantive assistance with funds raised from friends and alumni; but the largest and most consistent donor was the Arab League, to which AUC appealed in 1950. Ultimately, the opening of Egypt’s public universities to Palestinians from the mid-1950s eased the crisis.