This paper focuses on “forgiveness” as one of the most conspicuous expressions of the growing role of religion in conflict transformation. The main questions put forward are the following: What is the role of forgiveness in reconciliation? Is forgiveness a necessary condition for reconciliation between former enemies? Is it sufficient for bringing about real and stable peace between them? To what extent and how does religion affect the reconciliation via forgiveness process? This paper distinguishes between material conflicts, which evolve around material and dividable assets, and identity conflicts, which involve deep-seated hatred originating in the feeling of at least one of the sides that the other has usurped their legitimate rights. While material conflicts can be brought to an end through traditional conflict resolution techniques, identity conflicts need “track two” diplomacy strategies, and particularly forgiveness in order to reach reconciliation. Forgiveness, basically a religious concept, is a necessary (though not sufficient) condition for bringing about reconciliation in identity conflicts. To the extent that the sides to the conflict share similar religious convictions regarding the centrality and nature of forgiveness, religion will contribute to reconciliation. But if the contenders hold different (let alone conflicting) tenets regarding forgiveness, religion may hamper the reconciliation process. A quick glance at the three monotheistic religions shows significant differences in their approaches toward forgiveness. While Judaism, and to some extent Islam, see repentance as a sine qua non for forgiveness, Christianity highlights mercy and love and teaches its believers to ask and grant forgiveness without preconditions. These differences may widen the gap between the parties to an identity conflict that wish to resolve their conflict and ultimately reach full and genuine reconciliation. The arguments put forward in this paper need to be put to the test in historic and actual cases of identity conflicts. The Israeli–Palestinian conflict could serve as a suitable example for such a test. [ABSTRACT FROM AUTHOR]