[4] In 1985, she completed her PhD in computational molecular biology, under the supervision of Norman Grover, the Hebrew University of Jerusalem.

[citation needed] Margalit completed postdoctoral research at the National Institutes of Health (NIH) in the laboratory of mathematical biology under the supervision of Charles DeLisi, where she developed the first computational algorithm to predict antigenic peptides recognized by immune cells.

[6] In 1989, she returned to Israel and established her independent research group at the Faculty of Medicine, the Hebrew University of Jerusalem.

Her early research included development of computational algorithms for predicting binding of antigenic peptides to MHC molecules,[7] computational models of protein-DNA binding preferences,[8][9] also in collaboration with Nir Friedman,[10] identification of domain pairs as the building blocks of protein-protein interaction networks,[11] analysis of the integrated network of protein-protein and protein-DNA interactions[12] (in collaboration with Uri Alon), as well as computational models for predicting small regulatory RNA molecules in bacteria,[13] which were verified experimentally in collaboration with Shoshy Altuvia and Gerhart Wagner.

More recently, Margalit's lab studied the dynamics of regulation by small RNAs [14] (in collaboration with Ofer Biham), and computationally predicted that there are viral microRNA molecules that repress the human immune system, a mechanism that was experimentally validated in collaboration with Ofer Mandelboim.