Molėtai had a Yiddish and a Hebrew school, as well as a traditional Talmud Torah. The Jews of Molėtai worked in crafts, small industry, and trade. At the end of the 1920s the local authorities decided to close dozens of shops owned by Jews. As a result many Jews decided to emigrate to the United States, Uruguay and, especially, South Africa.
In 1940, with the annexation of Lithuania to the USSR, all the stores and workshops in Molėtai, most of which were owned by Jews, were nationalized. Zionist political parties and movements were banned and Hebrew educational institutions were closed down.
The Germans occupied Molėtai on June 26, 1941. Seven hundred local Jews were murdered at the end of June and the end of August 1941.
The Red Army liberated Molėtai from the Germans in the summer of 1944.