Palestinians have set fire to several cars in East Jerusalem, throwing stones and firebombs in a row with Jewish settlers.
The violence comes a week before peace negotiations are set to resume in the United States – the first direct talks since 2008.
Local residents said Jewish settler guards armed with machine guns entered the grounds of a mosque to reach a spring they regard as a biblical site.
Israel captured East Jerusalem along with the West Bank in the 1967 war and regards all of Jerusalem as its capital, a claim that is not recognised internationally.
Palestinians want East Jerusalem as the capital of the state they hope to establish in the West Bank and Gaza Strip.
It is just one of several core issues the two sides disagree on and many Middle East experts are doubtful the US-sponsored talks will lead to a comprehensive deal.