Tunisia has long been a voice for moderation and realism in the Middle East. President Bourguiba was the first Arab leader to call for the recognition of Israel in a speech in Jericho in 1965. Tunisia served as the headquarters of the Arab League from 1979 to 1990 and hosted the Palestine Liberation Organization's (PLO) headquarters from 1982 to 1993, when the PLO Executive Committee relocated to Jericho and the Palestinian Authority was established after the signing of the Oslo Agreement. (The PLO Political Department remains in Tunis.) Tunisia consistently has played a moderating role in the negotiations for a comprehensive Middle East peace. In 1993, Tunisia was the first Arab country to host an official Israeli delegation as part of the Middle East peace process and maintained an Interests Section until the outbreak of the 2000 Intifada. Israeli citizens of Tunisian descent may travel to Tunisia on their Israeli passports.

Wedged between Algeria and Libya, Tunisia has sought to maintain good relations with its neighbors despite occasionally strained relations. Tunisia and Algeria resolved a longstanding border dispute in 1993 and have cooperated in the construction of a natural gas pipeline through Tunisia that connects Algeria to Italy. Tunisia recently signed an agreement with Algeria to demarcate the maritime frontier between the two countries.

Tunisia's relations with Libya have been erratic since Tunisia annulled a brief agreement to form a union in 1974. Diplomatic relations were broken in 1976, restored in 1977, and deteriorated again in 1980, when Libyan-trained rebels attempted to seize the town of Gafsa. In 1982, the International Court of Justice ruled in Libya's favor in the partition of the oil-rich continental shelf it shares with Tunisia. Libya's 1985 expulsion of Tunisian workers and military threats led Tunisia to sever relations. Relations were normalized again in 1987. While supporting the UN sanctions imposed following airline bombings, Tunisia has been careful to maintain positive relations with her neighbor. Tunisia supported the lifting of UN sanctions against Libya in 2003, and Libya is again becoming a major trading partner.

Tunisia has supported the development of the Arab Maghreb Union (UMA), which includes Algeria, Morocco, Mauritania, and Libya. Progress on Maghreb integration remains stymied, however, as a result of bilateral tensions between some member countries.