On May 21, 2018, Paraguayan President Horacio Cartes announced that the Paraguayan embassy moved to Jerusalem, becoming the third country in the world, after the United States and Guatemala, to recognize the city as the diplomatic capital of Israel.

This was reversed in September 2018 by Cartes' successor, Mario Abdo Benítez. Foreign Minister Luis Castiglioni stated that "Paraguay wants to contribute to an intensification of regional diplomatic efforts to achieve a broad, fair and lasting peace in the Middle East."

In May 2023, President-elect Santiago Peña announced that he intended to move the Paraguayan Embassy in Israel from Tel Aviv to Jerusalem again after being sworn in as president

After being sworn in, President Peña followed through on his promise, announcing the Paraguayan Embassy would open in Jerusalem before the end of 2023. In 2024, Paraguay supported Israel in the South African case against Israel

In 2024, Paraguay voted against an arms embargo against Israel at the United Nations Human Rights Council.

Paraguay was one of the countries that voted for the 1947 UN Partition Plan. A vote in favour is a vote in favour of the colonial enterprise, no matter how much diplomacy has attempted to disguise Israel’s expansion with the two-state paradigm.

Not only has Paraguay supported the Zionist settler-colonial project since 1947, but the South American country and the apartheid state also share a more sinister history, both in terms of the repression of the indigenous populations, as well as maintaining diplomatic ties during Alfredo Stroessner’s military dictatorship.

Between 1956 and 1989, Stroessner enabled the ethnic cleansing of indigenous lands. In the 1970s, the dictatorship sold land to foreign companies which became complicit in the ethnic cleansing of Paraguay’s indigenous communities.

In 1969, Israel and Paraguay reached an agreement to transfer 60,000 Palestinians over a four-year period, a plan which was abandoned after two Palestinians killed an Israeli embassy employee in May 1970. Had the plan been successful, Paraguay would have been complicit with Israel in the forced transfer of Palestinians from their own homeland. Paraguay also hosted Nazi war criminals such as Josef Mengele, as did other Latin American countries, notably Argentina.

The country’s links to Nazism date back to 1927, when Paraguay became the first country, apart from Germany, to create a Nazi party. When it is politically opportunistic, Israel turns a blind eye to such things; even to the narrative it strives so hard to promote.

In 1969 the Israeli government under Golda Meir approved of a plan to pay 60,000 Palestinians to leave Gaza for Paraguay. At the time, Paraguay was ruled by the Alfredo Stroessner regime, which had agreed in 1967 to go along with the proposal, seeing Palestinians as ideal immigrants out of a need for labor as well as a notion that as mostly Muslims they were not inclined towards communism.

At the time the agreement was made, Israel had just occupied Arab territories in the Six-Day War, occupying Gaza with a substantial Palestinian population Israel wanted to systematically remove, in addition to the Sinai peninsula, East Jerusalem, Golan Heights, and the West Bank. While estimates of the exact number of Palestinians sent to Paraguay due to the project vary, ranging from "a few dozen" to "thousands", it is widely agreed that the project was a failure, with the number that made the trip being only a small percent of the 60,000 Palestinians in Gaza the Israeli and Paraguayan governments intended to reach.

Under the plan, Palestinians in Gaza were enticed to move to Paraguay by "travel agencies" set up in Gaza to promote emigration to Paraguay; those who moved to Paraguay would be given a one-time lump sum of $100, while the Paraguayan government would be paid $33 per Palestinian it accepted, and after five years of residency they were to become eligible for a path to citizenship.

However, upon arrival, having been left in the country with few resources and with no guarantee of employment, they became destitute. Many of those that went had been lured in with false promises of becoming landowners and receiving further financial support, leading to additional frustration.