The area, like the rest of Palestine, was incorporated into the Ottoman Empire in 1517. In 1596 Al-Ubeidiya appeared in Ottoman tax registers, called Dayr Bani 'Ubayd, being in the nahiya of Al-Quds in the liwa of Al-Quds. It had a population of 42 households and 6 bachelors, all Muslim. They paid a fixed tax-rate of 33,3 % on agricultural products, including wheat, barley, occasional revenues, goats and/or beehives; a total of 4,900 akçe. According to local tradition, the modern town of al-Ubeidiya was founded when members of the Shammar tribe from the Arabian Peninsula settled there, and it was not named after St. Theodosius, but after tribal leader, al-Ubeidi Faris.