Since the first Arab-Israeli war in 1948, West Bank and Gaza have been invaded by enormous flows of refugees. Many refugees in Palestine experience difficult living conditions and marginalization in labor market. The primary motivation of this paper is to investigate the level and structure of wage inequality between non-refugee and refugee workers in Palestine, and to how much the wage gap reflects any marginalization and discrimination against refugees. Using a cross-sectional data from the Palestinian Labor Force Survey (PLFS), we will incorporate the traditional Oaxaca and Blinder decomposition method with the unconditional quantile decomposition approach in order to decompose the wage disparities between the two groups and to examine the main origins of the observed inequalities between the two groups (refugees and non-refugees). The selection corrected OLS regression for Mincer’s equation displays that the gender pay gap in Palestine is entirely in favor of men for both refugee and non-refugee workers. Even being with the same experience and schooling as workers in West Bank, workers in Gaza may have lower wage. Unconditional Oaxaca-Blinder decomposition shows that only 9% of the gap is attributed to the differences in productivity characteristics between non-refugee and refugee workers, while 91% of the mean wage gap is explained by the discrimination against refugees. The wage gap between the two groups (refugees and non-refugees) is not uniform throughout the wage distribution, and wage differentials (positive and significant wage gap) are much higher at the bottom (26.6%) and top (28.5%) than the middle (15.4%) of the wage distribution. No significant discrimination effect displays at the 10th percentile and the differences in productivity characteristics for the employees (composition effect) significantly explains 83.47% (0.197/0.236 *100) of the wage gap. The discrimination effect become very clear at the median and top part of the wage distribution with 76.4% and 59% of the total effect respectively. The differences in wage between West bank and Gaza were mainly attributed to discrimination effect in either the bottom or top of the wage distribution. In addition, there is a discrimination against refugee in relevant with occupation like craft and related workers, workers in service and vendors in markets, plant and machine operators, and assemblers, and some industries in construction, commerce, hotels and restaurants, services & Other Branches.