For the first time in Israeli political history, the right wing, led by Likud, won a plurality of seats, ending almost 30 years of rule by the left-wing Alignment and its predecessor, Mapai.

The election saw the beginning of a period lasting almost two decades where the left- and right-wing blocs held roughly equal numbers of seats in the Knesset.

This led to a power struggle between former Chief of Staff and Ambassador to the United States Yitzhak Rabin and Transportation Minister Shimon Peres.

Rabin formed a new government on 3 June 1974, and presided uneasily over a quarrelsome coalition, with Shimon Peres as Defense Minister; their bitter feud dates from this period.

In November 1976, Yigal Laviv, a correspondent of the weekly HaOlam HaZeh who had also been involved in airing the charges against Yadlin, gave the police information on 30 different matters raising suspicions of offences committed by Ofer, including allegations of embezzlement in Shikun Ovdim funds in favour of the party.

The police examined Laviv's charges, but came to the conclusion toward the end of the year that they were not substantiated, leading Ofer to expect that an official statement clearing him would soon be made.

[8] Towards the end of 1976, Rabin's coalition with the National Religious Party suffered a crisis: a motion of no confidence had been brought by Agudat Yisrael over a breach of the Sabbath on an Israeli Air Force base, when four F-15 jets were delivered from the US, and the NRP had abstained from the vote.

Although polls suggested that Likud may win a historic victory, party leader Menachem Begin suffered a heart attack shortly before the election, and did not participate in the campaign.

Demonized by the Alignment as totalitarian and extremist, his self-portrayal as a humble and pious leader struck a chord with many who felt abandoned by the ruling party's ideology, particularly the predominantly Mizrahi working class living in urban neighbourhoods and peripheral towns.

The Left Camp of Israel was formed before the elections by the merger of Meri, Moked, the Independent Socialist Faction and some members of the Black Panthers.

[9] The list ran on right-wing populism (he was a supporter of the Gush Emunim settlement movement) and promises to provide apartments to young voters.

Begin kept four ministerial portfolios empty (Communications, Justice, Labour and Social Welfare and Transportation), hoping to persuade Dash to join the government.

The Democratic Movement later split up when three MKs founded Ahva and Yigael Yadin, Binyamin Halevi, Mordechai Elgrably and Shmuel Tamir left to sit as independents, while Zeidan Atashi and David Golomb defected from Shinui to the Alignment.

The Camp David Accords and the Egypt–Israel peace treaty which resulted in an Israeli withdrawal from Sinai led to Tehiya and One Israel breaking away from Likud.