Discrepancies exist in existing research regarding the association between social capital and self-rated health, most of which has been undertaken in the developed world. The aim of this study is first to assess the levels of the various variables describing individual social capital in Jews and Arab residing in Israel, and second to assess the association between individual social capital and self-rated health in these two population groups. The data were obtained from an Israeli health interview survey (knowledge, attitudes and practices (KAP)) conducted during 2004-2005, which is based on 3,365 interviews with adult Jews and 985 adult Arabs. Social capital measures included social trust, neighborhood safety, perceived helpfulness, trust in local and national authorities and social support. Data were also obtained on self-rated health and socioeconomic and demographic variables. Multivariate logistic regression revealed that Jews reported higher levels of social trust, perceived helpfulness, trust in authorities, and social support compared to Arabs, after adjusting for demographic and socioeconomic variables. Social contacts, however, were reported more frequently in the Arab population. Neighborhood safety was similar in the two population groups. Among Jews, those reporting higher levels of individual social capital reported better self-rated health after adjusting for demographic and socioeconomic variables. Among Arabs, only those reporting higher levels of social support reported better self-rated health. In Israel, individual levels of social capital seem to be lower in the Arab minority than in the Jewish majority. Individual social capital was associated with better self-rated health mainly in the Jewish population and less so in the Arab population. Social capital factors may be associated with health to a higher extent in affluent populations with relatively high social capital and less so in low social capital and more traditional communities. More research is needed to verify these differences.