Israeli police fired rubber bullets and tear gas inside the Al-Aqsa compound on Sunday after a standoff between Muslim and Jewish worshippers outside one of the gates to the holy site in occupied East Jerusalem.
The Israeli raid broke up the festival atmosphere inside the area as thousands of Muslims worshippers gathered to celebrate the first day of the Muslim Eid al-Adha celebrations.
A Palestinian ambulance service said that at least 14 Palestinians were taken to hospital for treatment.
Israel's Kan public radio said four police officers were injured.
The Muslim celebrations coincided with the Jewish holiday of Tisha B'av, which sees an increase in Jewish visits to the Al-Aqsa compound. Jews are allowed to visit the compound but not pray there.
In a bid to ease tensions, local authorities barred non-Muslims, including Jews, from visiting the site on Sunday but Muslim worshipers feared they would be allowed in.
Hundreds of Palestinians held a demonstration outside one of the gates to stop them entering the holy mosque.
Facing off with police in the packed compound, Palestinians chanted: "With our soul and blood we will redeem you, Aqsa".
Scuffles ensued and the crowd fled as sound grenades exploded and smoke wafted through the compound, witnesses said.
Among the injured was the Chief of the Islamic Waqf, Abdel Azeem Salhab, who helps administer the Al-Aqsa compound.
Pictures posted online showed crowds running away from the police to escape the tear gas and rubber bullets.
'Act of recklessness and aggression'
Hanan Ashrawi, a senior official in the Palestine Liberation Organisation, accused Israel of provoking religious and political tension.
"The storming of al-Aqsa mosque compound by Israeli occupation forces this Eid morning is an act of recklessness and aggression," she said in a statement.
The Al-Aqsa compound is the holiest site to Jews and the third holiest to Muslims.
After the confrontations died down, Jerusalem District Police Chief Doron Yedid said on Kan radio that he had lifted the visiting ban and Jewish visitors had then entered the area under heavy police guard.
Eid al-Adha commemorates God's testing of Abraham's faith by commanding him to sacrifice his son.
Tisha B'Av marks the destruction of the two temples built at the compound.
Source: Middle East Eye