Theories of socialization propose that children's ability to handle conflicts is learned at home through mechanisms of participation and observation--participating in parent-child conflict and observing the conflicts between parents. We assessed modes of conflict resolution in the parent-child, marriage, and peer-group contexts among 141 Israeli and Palestinian families and their 1st-born toddler. We observed the ecology of parent-child conflict during home visits, the couple's discussion of marital conflicts, and children's conflicts with peers as well as aggressive behavior at child care. Israeli families used more open-ended tactics, including negotiation and disregard, and conflict was often resolved by compromise, whereas Palestinian families tended to consent or object. During marital discussions, Israeli couples showed more emotional empathy, whereas Palestinians displayed more instrumental solutions. Modes of conflict resolution across contexts were interrelated in culture-specific ways. Child aggression was predicted by higher marital hostility, more coparental undermining behavior, and ineffective discipline in both cultures. Greater family compromise and marital empathy predicted lower aggression among Israeli toddlers, whereas more resolution by consent predicted lower aggression among Palestinians. Considering the cultural basis of conflict resolution within close relationships may expand understanding on the roots of aggression. (Contains 5 tables.)