This paper explores Nazareth’s experience of colonial transition—from the British Mandate to the Israeli state—as part of a singular history, an important yet often neglected part of Palestinians’ experience of stalled decolonization. Analyzing the city’s interactions with the central government throughout the 1940s and 1950s, this paper highlights the colonial nature of Palestinians’ encounter with the state, first in its Mandate incarnation and then immediately afterwards, in its Israeli one. I thus argue that 1948 should be understood not as a rupture but as part of a partial decolonization process: although the end of British colonialism dramatically changed the social, political and economic structures in the new nation-state, significant colonial features remained, as Palestinians continued to be excluded from power in the new self-defined Jewish state. I argue for the importance of continuities and differences in Palestinian reactions to the ruling state across the colonial transition. Nazareth residents built on their experiences under British colonial rule, refining their previous strategies to cope with their new reality under Israeli control. Nazarenes’ social and political mobilization allowed them to utilize the space made available through citizenship in Israel to negotiate their rights. At the same time, they were also unable to overcome the exclusions inherent to a political system that maintained the dominance of a Jewish majority. By showing how Palestinian activists utilized a range of strategies in their efforts to maintain their rights, I challenge the common resistance/collaboration dichotomy in analyzing Palestinian responses to the founding of the Israeli state. Situating this history very clearly in the context of oppressive, colonial state control, I show that even when undertaking actions regularly described in the literature as collaboration, including engaging with Israeli officials and playing by their rules, these Palestinians were neither duped, nor helpless, nor collaborators. Rather, they were conscious agents who sought to advance their individual and collective interests as best as they could in the context of military government and an exclusionary state.