His term of service officially came to an end on 29 June 1967, after Israel annexed East Jerusalem and dissolved the city council of East Jerusalem. Al-Khatib did not acknowledge his dismissal, but remained in Jerusalem and continued to work as director of the Arab Hotels Company and the Jerusalem Electric Company.
According to Meron Benvenisti, the Israeli administrator of East Jerusalem at the time, in the three weeks following the day the Israeli Defense Force took control of the city in the Six Day War and until the dissolution of the city council of East Jerusalem, Al-Khatib was working to immediately reinstate the municipal services and restore the calm to the city. He even helped in dealing with sensitive issues such as: surrender of weapons held by the civilian population and the removal of squatters from the destroyed synagogues in the Jewish Quarter of the Old city of Jerusalem. His actions attracted criticisms from fellow Arabs, who accused him of collaborating with the occupation. However, his summary dismissal made him a vocal opponent of the occupation.
In March 1968 he was woken by Israeli policemen at 3:00 AM and told he was wanted for interrogation. But instead of being taken to interrogation, he was given a deportation order alleging that his presence in Jerusalem constituted a danger to the security of Israel. He was then escorted to the border and handed over to the Jordanian authorities. He was not allowed to take anything with him, and his family learned of his expulsion from the radio.
His wife and two children decided to stay in Jerusalem, hoping for his return. In the autumn of 1969, Mrs. Khatib was detained and interrogated. She was then sentenced to three months in prison. No reason was given. After protests from many people, Mrs. Khatib was released after fifteen days. She was then given a permit to visit her husband and undergo an operation in Beirut. When she tried to return to Jerusalem after her convalescence, she was turned away at the border and refused entry. (Gilmour, pp. 136–137)
- David Gilmour: Dispossessed. The Ordeal of the Palestinians. Sphere books, Great Britain, 1983, (first published in 1980),