The interceptor, designed to shoot down long-range missiles, was fired into space from a coastal military launching pad in central Israel.
A senior defense source told The Jerusalem Post the interceptor took off at around 8 a.m. over the Mediterranean Sea, “obtained hypersonic speed, and reached an altitude of 100 kilometers, entering space.”
The test was led by technicians from the Israel Aerospace Industries, together with a team from the US Department of Defense's Missile Defense Agency.
The system is set to become operational by 2016 and is designed to effectively engage Iranian Shihab 3 missiles, among others.
Arrow 3 will be part of the multi-layered defense shield Israel is building. It currently has the Iron Dome missile defense system that can intercept short-range and medium-range rockets and has reportedly intercepted up to 85 percent of rockets fired from Gaza during the November 2012 conflict.