Focusing on the immigration of upper-middle-class Palestinian families to the Israeli town of Upper-Nazareth, originally built by the state to enhance Jewish presence in the area, this paper frames the concept of decolonising gentrification. Accordingly, it studies a unique inconsistency between economic class and ethnonational hegemony, which enables upwardly Arab minority families to overcome ethnic barriers and to exercise social and spatial mobility. Therefore, this paper explains how these socio-political dynamics challenge the local settler-colonial aspects of urban development and enable the reappropriation of colonised urban space. Focusing on the case of Upper-Nazareth and its former ‘Officers’ Neighbourhood’, we examine a distinctive contradiction between political power and economic abilities that triggers a unique case of gentrification, where the colonised minority gentrifies the colonising hegemony. At the same time, this decolonising gentrification, as we argue, takes place in restricted urban enclaves, and relies on an ethno-class price gap as it is only the minority upper-class who is willing to pay the increasing prices, due to their limited options. Therefore, as this paper shows, decolonising gentrification simultaneously challenges and recreates urban settler-colonialism, enabling limited market-oriented reappropriation while triggering ethnic-based accumulation and new forms of neoliberal exclusion.