Dalal and her Palestinian Fedayeen unit of eleven members arrived from Lebanon and landed on an Israeli beach.
During the attack, Dalal was killed by IDF fire.
The massacre prompted Israel to launch the Litani Operation against armed Palestinian organizations in Lebanon.
Speaking to an Israeli news outlet for the first time, Rashida Mughrabi, 52, told Ynet, "I have no regrets about what my sister did. The Israelis are the ones who forced her to carry out the attack because they expelled us and stole our lands. They caused us a great injustice by turning us into a nation of refugees, and, if it weren't for the occupation, Dalal would never have carried out the attack. Maybe she would have raised a family and pursued a career."
Rashida, who splits her time between Lebanon and Tunisia, is currently in Bethlehem for Fatah's sixth general congress.
"This is my first time in Palestine, and I can't put into words how I felt when I first set foot in the homeland," she said.
"Dalal did not (enter Israel) with the intent to kill. She came with a group of fighters who entered territory that was taken from them in order to free (Palestinians), but the intervention of the occupation's army led to the (end result)," said the sister.
Coastal Highway Massacre. Entire families killed (Photo: IDF Spokesman Unit)
"The objective was not to kill civilians, but to reach the Knesset and demand the release of Palestinian prisoners."
Rashida continued to say, "We don't like to kill. On the contrary, our religion forbids it, although the law does give us the right to fight the occupation to regain our freedom. It is the Israelis who purposely harm civilians; the entire world and all the international organizations determined that they used innocent civilians as human shields. At the very worst, Dalal may have taken civilians hostage, but she did not plan on killing them.
"The Israelis are champions at distorting the truth and preventing people from recognizing it. Even now they are doing it by changing the names of our streets and villages," she said, referring to Transportation Minister Yisrael Katz recent decision to change roadside signs across Israel's highways so that the all names appearing on them in English and Arabic would be a direct transliteration of Hebrew.
"If I have any regret, it's that I didn’t take part in the operation because Abu Jihad refused to have two sisters participate in the same operation," said Rashida.
"I feel the same pain that (kidnapped soldier Gilad) Shalit's family feels. They are not more human than we are. Shalit was an occupying soldier, and the whole world is intervening to advance his release while 11,000 Palestinian prisoners and thousands of fighters' bodies, including that of my sister, do not interest anyone. I want my sister's remains back just as much as Shalit's family wants its son returned."
The Mughrabi family's roots are in Jaffa, and Rashida is certain that she will eventually visit the coastal city. "Even if I am hanged, I'll never recognize Israel, and if the Fatah congress votes on the resistance article (in Fatah's charter), I'll vote against revoking our right to resist as stated in the charter.
"Given the opportunity I'd return to my home, my father's home. It is true that I was born 10 years after the occupation, but I've imagined our home (in Jaffa) so often that I'll now know to reach it on my own," said Rashida.
In a message to Israelis, Rashida said, "Get out of our land and let us live. All of the land is ours, and if the Israelis choose to live with us we will not oppose it. They are welcome to live with us, but not as occupiers."