The critical event in 1948 that intensified the conflict between Israel and Palestine during its formation was the division of Palestine and the subsequent declaration of independence by Israel. The United Nations proposed a plan to partition Palestine into separate Jewish and Arab states, which was accepted by the Jewish leadership but rejected by Arab states. Following Israel's declaration, surrounding Arab nations invaded, leading to the Arab-Israeli War. This war established the groundwork for ongoing conflict and territorial disputes that continue to affect relations in the region today.