Aim: The goal of this study was to examine the relationship between exposure to terror/war-related events, PTSD symptoms and sub-clinical psychosis symptoms among Palestinian and Israeli youth with and without a history of genetic risk for psychosis. Method: Exposure to terror/war-related trauma, presence and severity of PTSD symptoms, perceived ability to cope with trauma, familial genetic-risk, and APS were assessed in a representative sample of 530 Israeli and 1100 Palestinian (451 from Israel, 264 from the West Bank, and 385 from the Gaza Strip) young adults with a mean age of 36.7 (SD=8.4). PTSD symptoms were assessed with the Post-traumatic Disorder Scale (PDS), perceived ability to cope with trauma with the Perceived Ability To Cope With Trauma Scale (PACT), and APS with the Community Assessments of Psychic Experiences (CAPE). Results: As hypothesized, there was a significant three-way interaction effect of exposure to terror-war-related trauma, religion, and familial genetic-risk on APS. The highest level of APS was among Palestinians who live in the Gaza strip, with no significant differences between Jews and Palestinians who live in Israel or in the West Bank. Also, consistent with our hypotheses, the three-way association between exposure to trauma, familial genetic risk and religion were mediated by PTSD symptoms and perceived ability to cope with trauma. Discussion: These findings provide further support for the link between exposure to trauma, familial genetic-risk, and APS. Also, it provides further support for the mediating role that PTSD symptoms play in this link. Finally, it suggests that religious background moderates the link between exposure to trauma and APS.