This article presents and analyzes two examples of peace education practices in the Israeli-Palestinian context. "Zochrot" is an organization dedicated to raising public awareness of the Palestinian Nakba, especially among Jews in Israel. "The School for Peace" is a Jewish-Arab organization that conducts encounter activities with the goal of encouraging participants to become active in relation to the Palestinian-Israeli conflict. Both practices are grounded in critical pedagogy and postcolonial literature, and their aim is to change existing power structures. Current political realities, however, which include oppression, occupation, and injustice, exacerbate the challenge of this goal. We identify three challenges that demand attention if these practices are to realize their transformative potential: essentialism, responsibility of the victim, and singular utopia. Finally, we highlight the importance of hybrid identity as an educational approach that is a promising path for realizing the transformative potential of critical PE.