Cerebral palsy is the most common physical disability in childhood. Our aim was to study the prevalence of wheelchair-dependent cerebral palsy (equivalent to gross motor function classification system level IV/V) among Jewish and Arab children in Israel and to investigate differences between the children of the two population groups. Children diagnosed with cerebral palsy born in the years 2005–2006 were located through the Israel National Insurance Institute database. Demographic and clinical data were retrieved from children’s records. Overall prevalence in Israel was 0.8 (0.7–0.9) per 1000 live births. The prevalence was significantly higher among Arabs (1.2:1000) than Jews (0.6:1000; OR = 1.6, 95% CI 1.2–2.1, p = 0.001) and was highest among Arabs in the South (Bedouins) (2.8:1000). Consanguinity among parents and low socioeconomic status were significantly more common among Arab children with wheelchair- dependent cerebral palsy compared with Jews. Higher rates of children with cerebral palsy following term pregnancy were found in Arabs. Extreme preterm births, very low birth weight, and emergent cesarean section were more common among Jews compared with Arabs. This study revealed population group differences of cerebral palsy with Gross Motor Function Classification System levels IV and V. Higher rates of cerebral palsy, especially following term pregnancy in the Arab population, may be attributed to consanguinity and genetic factors. There is a need to tailor services to underserved population based on etiology: preterm births and genetic causes for the Jewish and Arab populations, respectively.