On November 15, 1988, to be precise, in Algeria. The State of Palestine, declared by the Palestinian National Council. Israel refused to recognise it, just as it refused to recognise the Mufti of Jerusalem's proclamation of a State of Palestine in 1948. You can't really declare a State unless you can prove sovereignty over some territory. Which, of course, the PNC can't because all of its territory is under military occupation. Catch 22, and a situation that Israel has no intention of changing, because it means that all negotiations are quite unequal - a State on one side and a stateless government on the other. A situation that Israel thinks that is just peachy.
World Jewish Congress: Nazi train treasures must go to rightful owners (Reuters)
from the article: Hamas denies Meshal said group would consider recognizing Israel