The Iranian government continues to develop and field an increasingly sophisticated range of cyber capabilities to support their strategic interests and to enable a variety of computer-based financial crime. These capabilities have directly and adversely impacted Israel, which has been the target of major cyberattacks either affiliated or directly orchestrated by the political leadership in Tehran. To assess this strategic threat, this article outlines the evolving objectives and characteristics of Iran’s cyber activity targeting Israel, including attacks on banks, airlines, the Israel Defense Forces, and critical infrastructure. The article includes a brief overview of Iran’s internet and telecommunications history and a technical assessment of government-linked advanced persistent threat (APT) groups. Ultimately, the article concludes that a deterrence-by-punishment strategy utilizing Israel’s computer network attack and exploitation advantage could provide an impactful—albeit not risk free—approach to offsetting Iran’s rapidly improving cyber posture.