The paper examines the willingness of Israeli Jews and Arab Palestinians for intergroup contacts during daily activities in diverse functional spaces and spatial organisational contexts within the metropolitan area of Tel‐Aviv, Israel. Semi‐structured interviews were conducted among visitors to public spaces in three mixed Arab‐Jewish areas: a mixed city; two adjacent Jewish and Arab suburban townships; and two relatively distant Jewish and Arab towns. The research findings indicate that higher‐order functional spaces (e.g. shopping mall), municipal separation and relatively large geographic distance between Jewish and Arab towns enhance willingness for inter‐group contacts, feelings of comfort and security and a shared ethnic identity of sites. We relate this tendency to the unique geographic distribution of Jewish and Arab localities in Israel which allows the separation between functional and residential spaces and thus a reduction of feelings of threat and discomfort experienced upon inter‐group exposure and contact.