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Foreign aid is considered a continuation of diplomacy by other means and a tool of foreign policy. However, in the current lean economic times, the competition for limited budgetary resources is fierce and the effectiveness of U.S. foreign aid at projecting U.S. influence is hotly debated within the government and the American public. This research builds on previous studies by examining the use of foreign aid as a U.S. foreign policy tool in Egypt and Israel through select historical examples from the 1950s and 1960s. The United States considers the Middle East stability to be a top national security priority and Israel and Egypt are important, influential players in the region. This research analyzed U.S. military and economic aid and the corresponding foreign policy objectives for amount and type of aid given to Israel and Egypt during this time period. U.S. foreign policy objectives were identified in the documents of the Foreign Relations of the United States. The resulting responses of Israel and Egypt were identified to infer the effectiveness of using U.S. foreign aid at achieving the U.S. foreign policy objectives. The historical review of the foreign relations of the United States for Egypt and Israel during the 1950s and 1960s showed that the United States attempted to use foreign aid to maintain influence with Israel and Egypt as well as to counter communism in the region. However, the historical examples for Israel and Egypt showed that foreign aid was an ineffectual tool of foreign policy when the priorities of the giver and the recipient are not aligned. When U.S. foreign policy objectives for the aid were at opposition to Israel’s political agenda, Israel was able to out-maneuver, delay, and finally outlast the United States during the negotiations for key military aid that Israel considered necessary for its security. For Egypt, the incentive of U.S. foreign aid had little influence on directing Egyptian policies away from the Soviet Union toward the United States when the Soviet Union was an alternative source of aid with seemingly no strings attached.