The project has aroused criticism because the route passes through territories captured by Israel in the Six-Day War,[10] and, in part, serves developments east of the green line, such as French Hill and Pisgat Ze"ev, considered illegal Israeli settlements by many international bodies.[11] In consequence, Dutch bank ASN divested from Veolia Environnement.[12] Both Veolia and Alstom face possible legal action in the French courts.[13][14]

The project has also been criticized for increasing air pollution in Jerusalem.[15] Nir Barkat, mayor of Jerusalem, was critical of the traffic jams caused by construction and told Yair Naveh, CEO of CityPass, that "The process isn"t being managed, you can"t stop a city. This is intolerable".[16] In March, he said he proposed to cancel the project after the first two lines are completed, and told the San Francisco Chronicle that he wants to replace the rest of the planned rail network with buses.

The financial management of the project has also been criticized, and a report published in May 2008 by State Comptroller Micha Lindenstrauss pointed to a 128% deviation in funds, from an estimated NIS 500 million to NIS 1.14 billion. It was also noted that the government had spent NIS 1.2 billion on the project up to 2007, which pointed to a further deviation.