UNITED STATES

                             WASHINGTON, D.C. 20549


                                    FORM 8-K

                                 CURRENT REPORT
                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

        Date of report (Date of earliest event reported): October 11, 2005
                                                          (October 10, 2005)

               (Exact Name of Registrant as Specified in Charter)

      New York                     0-538                      13-0435685
   (State or Other              (Commission                 (IRS Employer
   Jurisdiction of              File Number)              Identification No.)

   111 Arlozorov Street, Tel Aviv, Israel                       62098
  (Address of Principal Executive Offices)                    (Zip Code)

        Registrant's telephone number, including area code 1-866-447-8636

          (Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

     [ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)

     [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)

     [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))

     [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))

Item 1.01  Entry into a Material Definitive Agreement.

     On October 10, 2005, the Board of Directors (the "Board") of Ampal-American
Israel Corporation (the "Company"), based upon the recommendation of the Stock
Option and Compensation Committee of the Board, approved the grant pursuant to
the Company's 2000 Incentive Plan (the "2000 Plan") to each of Eitan Haber,
Yehuda Karni and Menahem Morag, the Company's non-employee directors, of options
to purchase 45,000 shares of the Company's Class A Stock, par value $1.00 per
share, at an exercise price of $3.69 per share, with each grant vesting in equal
installments beginning on January 10, 2006 and each three month anniversary
thereafter. The form of option agreement pursuant to which the options were
granted under the 2000 Plan is being filed as Exhibit 99.1 hereto.

Item 9.01. Financial Statements and Exhibits.

     (c)  Exhibits

          Exhibit No.          Description of Exhibit
          -----------          ----------------------

          99.1                 Form of Option Agreement.


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:  October 11, 2005

                                AMPAL-AMERICAN ISRAEL CORPORATION

                                By: /s/ Yoram Firon
                                    Name:  Yoram Firon
                                    Title: Vice President - Investments
                                           and Corporate Affairs

                                  EXHIBIT INDEX

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99.1                    Form of Option Agreement.