The ceremony, held at Tel Aviv's Trade Fairs Center, was attended by dozens of the party's activists, ministers and Knesset members.
Prime Minister Benjamin Netanyahu, who took the stage to the sound of roaring applause, began his speech by saying, "We have proven that we desire peace and we are willing to compromise, but we will not be taken for fools.
"One thing is clear – there is a government in Israel that bolsters security, that is leading the economy and that is pursuing a responsible peace process, while preserving Israel's crucial interests.
"Unity is an important thing. We are facing formidable challenges and we need unity to succeed. We have some vigorous Knesset members in the faction – sometimes too vigorous," he jeered, alluding to the recent internal opposition to the planned settlement freeze in the West Bank, "But I appreciate their contribution and everything they do for Israel."
Since his Bar Ilan speech, continued Netanyahu, "I've been working on getting international recognition for two things: Israel as the Jewish homeland and that any peace agreement must include security arrangements. We will not allow for a 'Hamastan' among us.
"I call upon our settler brethren: You are good, loyal citizens of Israel. You deserve a normal life and we will pursue a peace process which will enable you to have it.
"Jerusalem will remain united," he concluded, "And Israel's capital forever."
'There's hope for leadership'
Over at Petah Tikva, Kadima hosted its annual Rosh Hashana toast.
Dozens attended the ceremony, including activists, party members and MKs. Shaul Mofaz, however, was conspicuously absent.
Kadima Chairwoman Tzipi Livni seemed unfazed by Mofaz absence, joining other Kadima members on the stage for an impromptu sing-along.
"We won the elections and no one can take that from us," she said. "The next election will see us triumph over all the blocs that are trying to impede the change Israel needs so much.
"The public knows there is still hope for Israel's leadership… Kadima will make the citizens of this country proud to be Israelis. The public deserves a better new year. I'm not rooting for anyone to fail, I just hope they're able to do the right thing."
Unlike Livni, however, many of Kadima's activists did miss Mofaz: "The activists have noticed his absence and it rather spoils the festive atmosphere," one of them told Ynet.
"As someone who cares about the party, I would like to see both of them toasting the new year together."
Mofaz's office said that the MK "attended a ceremony hosted by bereaved families, as he does every year. The meeting was set prior to Kadima's ceremony and Mofaz believes bereaved families come before political affairs."
Amnon Meranda contributed to this report