The purpose of the study was to examine the unique interethnic contact situation provided by the Israeli Shelef project and its consequences in changes of ethnic stereotypes among Shelef participants. The study population consisted of all 49 Shelef members during the academic year 1979-1980, who resided in seven different development towns. They responded to an anonymous questionnaire which solicited information concerning their personal background and measures of interethnic relations. The data indicate that the tendency to generalize and to relate to people categorically decreased over the year and was replaced by a more individualistic approach to people different than one's own. Also, Shelef members' valuation of eastern Jews and development townspeople became higher, and their readiness to associate with them became complete and unconditional at all levels of intimacy. The implications of the project for providing adolescents with meaningful experiences, bringing the school and the "real world" closer together, are also discussed.