Israel existed too. What's your point? Ancient Israel and ancient Palestine (Pilishtia) were two neighboring countries. I'd be very satisfied with a Palestinian state within the boundaries of ancient Palestine, and an Israeli state within the boundaries of ancient Israel.
Was it owned by the Muslims? Oops, no, couldn't have been, could it? Say, check out your Bible, Jews lived in Israel before Christianity OR Islam even existed. Oh, I forgot, you're the one who thinks that Shakespeare, Chaucer, and now Herodotus should be referenced when analyzing history, but not the Bible.