This critical-qualitative study examines the phenomenon of “chronic ethical dissonance” among Arab social workers in Israel, who operate within bureaucratic welfare institutions, embedded in a colonial reality. The research identifies an inherent ethical dissonance that germinates due to the social workers’ encounter with the institutional sphere and analyses how this discord is transmuted into practices of “clandestine decolonization” within a dissident “Third Space.” Supported by an integration of internal colonialism, decolonization, and “Third Space” theories, the research draws on semi-structured in-depth interviews with twenty-seven social workers from a diverse range of public social services. The findings describe a professional reality oscillating between restriction by structural oppression and creative resistance. Analysis identified four central themes that interlink power structures (systemic microaggressions), internal experience (the moral price), and action (dual resistance): systemic microaggressions, the moral price of identity fragmentation, creative non-compliance, and cultural brokering as a reclamation of knowledge sovereignty. The conclusions indicate the need for a critical decolonial pedagogy in societies where a hegemonic majority governs a dispossessed population.