This thesis is an attempt to find a sustainable solution for the Palestinian refugee problem. It analyzes the Palestinian refugee case and how different actors in the Palestine-Israeli conflict view it. The Palestinian refugees issue is one of the most complicated matters in the peace negotiations between the two parties and without solving it there will be no permanent and sustainable peace in the Middle East region. There is a need for compromise from both the Israelis as well as the Palestinians to find a sustainable solution for the Palestinian refugee problem. The international community in general and those who have the political, military as well as economic power in particular must play an important role in the final settlement of the issue by providing economic incentives to repatriate and compensate the Palestinian refugees. The Right of Return should be respected in any case. While some Palestinian refugees might go back to their historic home land in what nowadays is called Israel, others might have no choice but to be permanently settled in their current host countries provided that they are given full citizenship rights in their host country as well as in the promised Palestinian State.