Israel's Planning and Grants Committee (PGC) was formed in 1974 to function as an intermediary body between the higher education system and the government in financing of higher education institutions. The PGC is largely composed of academics from universities. It was meant to guarantee both academic freedom of the higher educational system while providing for greater accountability. However, the PGC has increased its involvement in higher education and assumed also the role of planning the system as a whole and regulating the development of individual universities. This article analyzes the effects of PGC policies on Israel's universities in general and specific acts which have restricted institutional autonomy and might further limit their academic freedom.