Levy has put up his own money to help fund the initiative, which will be seen in Israel and Arab countries.
The ads, using TV, newspapers, billboards and the internet, were created by staff from agencies in Israel and Palestine. The campaign idea came from discussions between Levy and Shimon Peres, the former Israeli prime minister, which began at the height of the Palestinian intifada, about a communications programme that could deliver the same message to the two communities simultaneously.
The TV films show Palestinian and Israeli youngsters individually and together. The soundtracks feature Arabic and Hebrew versions of John Lennon's Imagine.
The campaign will break in the autumn and Levy is appealing for individual and corporate sponsors to sustain it. TV networks throughout the Middle East are being asked to donate free airtime.
Its appearance comes at a crucial time in the peace process with Israel bitterly divided over plans by the prime minister, Ariel Sharon, to give up the Gaza strip settlements.
Levy, who unveiled the campaign at last weekend's World Economic Forum in Jordan, said: "Yes, the Arab-Israeli conflict is about land, liberty, justice and security but I also feel it touches very deeply on communication, or the lack of it."