The University of Texas will open a new branch in Nazareth in northern Israel, education officials said.
The campus is set to open in 2015, with an enrollment of 2,500, the Council for Higher Education in Israel said.
Students who complete their coursework will receive a degree from the University of Texas.
President Shimon Peres and Education Minister Shai Piron have been involved in the project, Ynetnews.com said.
The council said it be the first time a leading foreign university opens a campus in a city with a predominantly Arabic population. Nazareth is known as "the Arab capital of Israel."