During Netanyahu’s initial term as Prime Minister, negotiations with Arafat and the Palestinians progressed at a very slow pace. Prime Minister Barak was unwilling to continue the process as it had been unfolding. Barak expressed his views as follows in his book My Country My Life:

By the Oslo timetable, we were three years behind in starting work on a permanent-status agreement with the Palestinians and just six months away from an American election that would choose President Clinton’s successor. We could, of course, pursue the Oslo process along its current meandering path. But even though Bibi had slowed it down, that would mean Israel handing back yet more West Bank land to Arafat—in return for familiar, but still unfulfilled and untested, verbal assurances that he wanted peace. Each successive Israeli withdrawal reduced his incentive to engage on the difficult issues like final borders, refugees, or Jerusalem. I couldn’t justify that, either to myself or my country. The second option was the summit. While there was no guarantee it would succeed, it would force Arafat to negotiate on the core issues before the departure of an American president who had a grasp of the issues and characters involved and a personal commitment to converting the promise of Oslo into a genuine peace.

Barak had to convince Clinton to proceed with a summit, and Clinton finally agreed after Barak outlined the concessions he was willing to make. The summit began on July 11, 2000. Barak, reflecting on the event, noted that if he had been superstitious, he would have left upon arrival, as he had reached Camp David in pouring rain. For a week, the two sides primarily negotiated through the Americans, with only a few direct meetings between Arafat and Barak. When Clinton had to leave for a summit in Japan, the parties remained at Camp David until his return. Upon his return, a final effort was made to reach an agreement.

Barak made the most far-reaching concessions ever offered by an Israeli leader, including 91% of the West Bank, additional land in the Negev as part of a swap, most of Arab East Jerusalem, and parts of the Old City. Despite these significant offers, Arafat refused to agree on three key points: the return of refugees only to the Arab state, some form of Israeli sovereignty over parts of the Temple Mount, and the recognition of the Jewish historical connection to the Temple Mount. Arafat's response shocked Clinton, especially his denial of the existence of the Jewish Temple in Jerusalem.

Barak had only given the summit a 50/50 chance of success. In hindsight, he faced criticism from the left for attending the summit and for not offering enough to Arafat. When asked about this criticism, Barak responded, “Do you truly believe that if I had offered another 5%, it would have changed Arafat's refusal to budge on the core issues?”

In the final months of the Barak government, the United States attempted to revive the peace process. However, after Arafat’s refusal to concede on key points, no agreement could be reached.