The Madrid Conference was hosted by the government of Spain and co-sponsored by the USA and the USSR. It convened on October 30, 1991 and lasted for three days. It was an early attempt by the international community to start a peace process through negotiations involving Israel and the Arab countries including Syria, Lebanon, Jordan and the Palestinians. In the aftermath of the 1991 Gulf War, US President George H.W. Bush and his Secretary of State James Baker formulated the framework of objectives, and together with the Soviet Union extended a letter of invitation, dated October 30, 1991 to Israel, Syria, Lebanon, Jordan, and the Palestinians.

The Palestinian team, due to Israeli objections, was initially formally a part of a joint Palestinian-Jordanian delegation and consisted of Palestinians from the West Bank and Gaza without open PLO association like Saeb Erekat, Faisal Husseini, Hanan Ashrawi and Haidar Abdel-Shafi, who were however in constant communication with the PLO leadership in Tunis.

The purpose of the conference was to serve as an opening forum for the participants and had no power to impose solutions or veto agreements. It inaugurated negotiations on both bilateral tracks and on multilateral tracks that also involved the international community. The Syrian and Lebanese negotiators agreed on a common strategy.

The first-ever public bilateral talks between Israel and its neigbbors (except Egypt) were aimed at achieving peace treaties between the 3 Arab states and Israel, while the talks with the Palestinians were based on a 2-stage formula, the first consisting of negotiating interim self-government arrangements, to be followed by permanent status negotiations. (This formula was essentially followed in the later Oslo process.) They opened immediately following the conference on November 3, 1991 in Madrid, and were followed by over a dozen formal rounds in Washington, DC from December 9, 1991 to January 24, 1994

The bilateral Israeli-Palestinian negotiations were upstaged and eventually replaced by initially secret negotiations that finally led to the exchange of letters of 9 and 10 September 1993 and the subsequent 13 September 1993 signing on the lawn of the White House of the Declaration of Principles, which however were essentially based on terms which the Madrid round Palestinian negotiators had earlier rejected.

After Likud lost the parliamentary election of June 1992, Labor party leader Yitzhak Rabin formed a new government .