Background: The Galilee Study is the first large epidemiological study to compare correlates of mental disorders between two Arab Palestinian minority groups of adolescents in Israel. Methods: A two-stage cross-sectional study, carried out between 2012 and 2014, included all 9th grade students from 5 Arab localities, representative of 77% of the Muslim and 100% of Druze citizens in Israel. During the screening stage, 1639 students completed the Strengths and Difficulties Questionnaire in the classroom (response rate = 69.3%). During the follow-up stage, 704 adolescent-mother dyads were interviewed at home; using the Development and Well-Being Assessment, the General Health Questionnaire (GHQ)-12, the Subjective Feeling of Discrimination Index (FDI), and socio-demographic questions (response rate = 84.4%). Results: Prevalence of any disorder, internalizing or externalizing disorders among Muslim adolescents were 19.2, 15.8 and 4.2%, respectively and among Druze adolescents 10.9, 5.9 and 5.5%, respectively. Muslim adolescents were 3.2 times more likely than Druze adolescents to have an internalizing disorder, while Druze were 2 times more likely than Muslim to have an externalizing disorder. Males were at higher risk than females for externalizing disorders in both populations, though among Druze the risk was more striking. Learning disabilities increased the likelihood of having an externalizing disorder in both populations. Risk factors for internalizing disorders among Muslim adolescents were female gender, a very low socio-economic level, few siblings, LD, high maternal GHQ-12 score and high FDI; and for externalizing disorders, male gender, a relatively low socio-economic level but not the lowest, learning disability and high maternal GHQ-12 score. Conclusions: We found an association between religion/ethnicity and internalizing and externalizing disorders as well as a strong correlation between religion/ethnicity and socio-economic variables. Therefore, we tend to conclude that not religion per se but the multifaceted socio-cultural and economic factors that characterize religious groups are associated with mental disorders. Very low socio-economic level and feeling discriminated which were traits connected only to Muslim adolescents, were associated with internalizing disorders. When preparing preventive measures aimed at furthering mental health among minority adolescents, authorities should focus on improving the socio-economic status of minorities and reducing institutional and personal discrimination. The educational and mental health establishments could undertake measures to improve resilience and coping strategies of Muslim families living in the most adverse conditions, such as providing special support through the school counseling services and coordinating, at the ministerial levels, school and community health services in order to carry out joint preventive programs and referrals to specialist services when needed.