The Israeli mission to the UN had said that showing the movie in the UN General Assembly hall was "clearly a politicized decision" that "shows poor judgment and a lack of even-handedness."
But UN General Assembly president Joseph Deiss of Switzerland turned down the Israeli request to cancel the event. A spokesman said Deiss hoped that showing the film would "contribute" to a settlement in the Israeli-Palestinian conflict.
Schnabel, who was awarded the best director at Cannes in 2007 for "The Diving Bell and the Butterfly," praised the UN decision at the start of the film and called his film a "cry for peace."
The film, with Indian actress Freida Pinto of "Slumdog Millionaire" fame in the lead role, is based on an autobiographical novel by Palestinian journalist Rula Jebreal that traces the Arab-Israeli from a Palestinian perspective.
Like Jebreal, the lead character Miral grows up in an orphanage in East Jerusalem set up by a socialite from a wealthy Palestinian family, who one morning in 1948 came across 55 children who escaped a village taken over by radical Jewish militants.
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