Despite the signing of the 1949 Armistice Agreements that signified the end of the War of Independence, Israel soon found itself under military threat from its neighboring Arab countries.

The most worrisome threat was from Egypt, which in addition to sponsoring Fedayeen terror attacks against Israel had bolstered its military after signing a deal with Czechoslovakia for over $250 million worth of Soviet arms.

Tensions peaked in July 1956 when Egyptian President Gamal Abdel Nasser nationalized the Suez Canal, blocking Israeli trade and jeopardizing the oil interests of Britain and France in the region. Israel was able to use this to galvanize Britain and France to fight against Egypt.

On October 29, 1956, Israel bombed Egyptian targets throughout the Sinai and air-dropped two battalions of Paratroopers into the heart of Sinai (the only combat jump in IDF history).
As agreed, British and French forces soon joined the war and bombed numerous targets throughout the Sinai and Egypt. By November 3rd, the Israelis had gained control of the Gaza Strip and El Arish (the capital of the Sinai), and a day later conquered Sharam el-Sheikh, a strategic city overlooking both the Straits of Tiran and the Gulf of Aqaba. 
The war ended on November 5th with a resounding Israeli victory. 

With Israel controlling the Gaza Strip and Sinai Peninsula and French and British troops on the verge of conquering the Suez Canal, Egypt agreed to end the blockade of its waterways.
However, due to international pressure led by the United States, Israel pulled its troops out of the Sinai and Gaza Strip and gave them back to Egypt.