The club was formed by a merger of Maccabi Sakhnin and Hapoel Sakhnin in 1991. They were promoted to Liga Artzit (then the second tier) in 1997. In 1998-99 they finished in the relegation zone, but were reprieved when Maccabi Jaffa, who had finished bottom of the top division, were relegated three leagues due to financial problems.

In 2002-03 the club finished as runners-up and promoted alongside fellow Israeli-Arab club Macacbi Ahi Nazareth, becoming the joint-second Israeli-Arab club to play in the top flight after Hapoel Tayibe. Promotion was only won on the last day of the season, the club overtaking Hapoel Jerusalem when they won 1-0 away to Maccabi Kiryat Gat, whilst Hapoel were held to a 0-0 draw at Hapoel Ra'anana.

Prior to their first season in the top division, Sakhnin were favourites to be relegated, and it was thought that Nazareth had a better chance of survival. Questions remained as to whether the squad that gained promotion would be able to compete at the top level, along with the added pressures not to become the next Hapoel Taibe (who were relegated in their first season in the top flight, and subsequently suffered financial problems leading to repeated relegations thereafter). They also lost manager Momy Zafran who resigned shortly after the club won promotion, replacing him with Eyal Lahman. In addition, the club had to play games in Haifa's Kiryat Eliezer Stadium, as their home ground in Sakhnin was deemed unfit for the Premier League.