The Islamic Resistance Movement’s (Hamas) big win in the elections to the Palestinian Legislative Council (PLC) marks the end of Fatah’s political hegemony. Having trumped Fatah in the elections, Hamas faces several domestic and foreign challenges. Having inherited the ruins of the Oslo Agreement, including the beleaguered Palestinian Authority (PA), a Hamas-led government cannot deliver on its elections promises of rooting out corruption and reforming the Palestinian Authority without massive funding from foreign donors. Unless Hamas renounces violence, acknowledges the right of Israel to exist, and accepts previous agreements between the PLO and Israel, it will be politically isolated by Western countries (USA, EU), ignored by most Arab states, and shunned by Israel. This places Hamas at a crossroads: it must either comply with the demands of renouncing violence and accept a process of political “integration” or defy political and economic sanctions that will isolate the new leadership and infl ict damage on their people and economy. This paper examines the prospects before Hamas and the political options facing the new leadership in the quest for Palestinian statehood.