Between 1929 and 1939, with the rise of Nazism in Germany, a new wave of 250,000 immigrants arrives in Palestine, the majority of these, 174,000, arriving between 1933–1936, after which increasing restrictions on immigration by the British make immigration clandestine and illegal, called Aliyah Bet.

The Fifth Aliyah is again driven mostly from Eastern Europe as well as professionals, doctors, lawyers and professors, from Germany.

Refugee artists introduce Bauhaus (Tel Aviv has the highest concentration of Bauhaus architecture in the world) and found the Palestine Philharmonic Orchestra.

With the completion of the port at Haifa and its oil refineries, significant industry is added to the predominantly agricultural economy.

The Jewish population reaches 450,000 by 1940.At the same time, tensions between Arabs and Jews grow during this period, leading to a series of Arab riots against the Jews in 1929 that leave many dead and result in the depopulation of the Jewish community in Hebron.

This is followed by more violence during the "Great Uprising" of 1936–1939.

In response to the ever increasing tension between the Arabic and Jewish communities married with the various commitments the British faced at the dawn of the Second World War, the British issue the White Paper of 1939, which severely restricts Jewish immigration to 75,000 people for five years.

This serves to create a relatively peaceful eight years in Palestine while the Holocaust unfolds tragically in Europe.Shortly after their rise to power, the Nazis negotiates the Ha'avara or "Transfer" Agreement with Zionists under which 50,000 Jews and $100 million of their assets are to be moved to Palestine.